GF Securities, China’s third largest securities broker, will list on the Hong Kong Stock Exchange, in which it plans to use the proceeds to develop a securities lending and margin financing business.
According to a filing to the Hong Kong exchange, it is also looking to develop an online financial and wealth management platform, and enhance its institutional client services businesses. The filing does not state how funds from the IPO will be distributed to these projects.
Securities lending in China has only gradually developed since the start of a pilot project in 2012, which intended to liberalize short-selling and boost China’s derivatives market.
The China Securities Finance Corporation (CSF), which was jointly founded by the Shanghai Stock Exchange, Shenzhen Stock Exchange and the China Securities Depository and Clearing Corporation, was the first institution in the country that provides margin financing and securities lending to China’s capital market.
However, demand for financing in China’s capital markets is set to take off as its domestic A-Shares market increasingly opens up to foreign investors via Stock Connect, a mutual market access programme between Hong Kong and Shanghai.
The plans from GF Securities follows rival brokers Citic Securities and Haitong Securities, China’s two biggest brokerages, and China Galaxy Securities, which are all looking to raise funds in Hong Kong to boost margin financing and securities lending operations.
According to reports, GF Securities plans to raise $1 billion from an initial public offering (IPO), and also aims to set up a securities services unit with 35 other partners.
GF Capital (Hong Kong) and Goldman Sachs are joint sponsors for the sale, the filing shows.
GF Securities Plans Securities Lending Business Through IPO
GF Securities, China’s third largest securities broker, will list on the Hong Kong Stock Exchange, in which it plans to use the proceeds to develop a securities lending and margin financing business.