Temasek, GIC invest S$739 million in Citic Securities

HONG KONG – Singapore investment company Temasek Holdings and sovereign wealth fund GIC will plough in another HK$4.3 billion (S$739 million) into Citic Securities, as the Chinese broking firm raises as much as HK$27.1 billion via a placement of new shares to ten institutional investors.

Citic Securities, China’s biggest brokerage by market value, will sell as many as 1.1 billion new Hong Kong-listed shares at HK$24.60 each, it said in a statement filed with the Hong Kong stock exchange. That’s a 19 per cent discount from Monday’s closing price.

China’s brokerages, including Guotai Junan Securities and Shenwan Hongyuan Group, are selling shares as the nation’s stock market boom boosts their earnings. The Shanghai Composite Index has surged 141 per cent in the past year on a record jump in margin financing and as the central bank cut borrowing costs.

Cairnhill Investments, a wholly-owned unit of Temasek, will take up about 94.5 million shares, while GIC will take up 78.5 million shares, which will result in their holding stakes of 0.78 and 0.65 per cent, respectively, in the total share capital of Citic Securities.

Besides Temasek and GIC, the other investors buying Citic shares in the latest placement include a China Cinda Asset Management-backed fund; Kuwait Investment Authority; Malaysia’s Khazanah Nasional; Yunfeng Financial Holdings, backed by Alibaba’s billionaire founder Jack Ma; and funds run by Fidelity Worldwide Investment, Och-Ziff Capital Management and Harvest Global Investments. One buyer – a Chinese institutional investor - wasn’t identified by name in the filing.

Citic said it plans to use about 70 per cent of the funds to develop flow-based operations, including margin financing, securities lending, equity derivatives as well as fixed-income, foreign exchange and commodities products. It will use the other 20 per cent to develop cross-border operations, build platforms and as working capital. - BLOOMBERG