Apax commits $388m to Guotai Junan's Hong Kong IPO
Apax Partners has agreed to invest $388 million in Guotai Junan Securities as the largest cornerstone investor in the Chinese brokerage’s HK$16.5 billion ($2.1 billion) Hong Kong IPO.
Guotai Junan is selling 1.04 billion H-shares – assuming the overallotment option is not exercised – for HK$15.84 apiece, according to a filing. Apax and five other cornerstone investors, including investment units of the National Council for Social Security Fund, Industrial & Commercial Bank of China and China Bank of Communications, will subscribe to 293.5 million shares for a total commitment of $598 million.
Apax will hold, 190.4 million shares, or a 16.65% stake, in Guotai Junan’s Hong Kong-listed unit on completion of the offering. This amounts to 2.2% of the entire company. Guotai Junan went public in Shanghai in 2015, raising $4.85 billion, and state-owned Shanghai International Group retains control through the mainland entity.
Guotai Junan is primarily involved in investment banking, including equity and debt financing and financial advisory services, and providing institutional investor services such as prime brokerage, proprietary trading, and securities-backed financing. It is also active in in personal finance and investment management. The company has 368 branches nationwide.
Revenue came to RMB32.1 billion ($4.6 billion) in 2016, down from RMB51.8 billion the previous year, as volatility in the A-share market hit client demand, driving down fee and commission income, interest income and investment gains. Net profit fell to RMB11.3 billion from RMB16.7 billion.
Apax invests globally from a single fund, the most recent of which closed last December at the hard cap of $9 billion. The firm made full exits from Tommy Hilfiger Asia and India’s Cholamandalam Investment & Finance in 2016. It also sold a 48% stake in GlobalLogic, an IT outsourcing company with a sizeable India presence to Canada Pension Plan Investment Board (CPPIB).
Other current portfolio companies in Asia include India-based Shriram City Union Finance and Zensar Technologies.
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