Temasek, QIA back Citic Securities’ $1.9b IPO

Sources told Bloomberg that Citic Securities will sell 995.3 million shares at HK$12.84-15.20 in what is likely to be the largest IPO in Hong Kong since Prada raised $2.5 billion in June.

The price range values the company at 1.18-1.39x estimated 2011 book value and at 13.4-15.9x forecast 2011 earnings. Eleven Chinese brokerages listed in Shanghai trade at an average price-to-book multiple of 1.73 for 2011 and at 15.2x estimated full-year earnings.

Citic Securities went public in Shanghai in 2003 and has a market value of around $19 billion. Financial conglomerate Citic Group owns 24% of the company.

Bank of America, BOC International Holdings, Bocom International Holdings, CCB International, CITIC Securities International, CLSA, HSBC, Haitong International Securities Group, ICBC International Holdings and Morgan Stanley are managing the offering.

Temasek has come on board as a pre-IPO investor for a number of Chinese financial services companies. The sovereign wealth fund reportedly contributed more than $300 million to Agricultural Bank of China's offering in 2010. KIA, Qatar Investment Authority (QIA) and China Investment Corp. also participated, helping AgBank set a new world record for public fundraising of $22.1 billion.

Temasek was also an early investor in Bank of China (BoC) and China Construction Bank (CCB). In July it sold down its holdings in both banks to 6.2% and 2.2%, respectively, raising $3.6 billion.

Barely two months later, Temasek teamed up with QIA and a Chinese consortium comprising the State Administration of Foreign Exchange, the National Council for Social Security Fund (NSSF) and Citic Securities to buy a 5% stake in CCB divested by Bank of America.

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• Topics
• Financials
• Greater China
• Temasek Holdings
• QIA
• KIA
• CIC
• NSSF