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Citigroup's Chinese partner plans US$1.6b IPO in Shanghai

Tuesday, March 3, 2015 - 11:25
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Orient Securities Co, Citigroup Inc's Chinese partner in an investment-banking venture, is seeking US$1.6 billion in what could be the nation's largest initial public offering in more than three years.

[BEIJING] Orient Securities Co, Citigroup Inc's Chinese partner in an investment-banking venture, is seeking US$1.6 billion in what could be the nation's largest initial public offering in more than three years.

Orient Securities plans to sell as many as 1 billion shares in Shanghai, the brokerage said in offering documents dated March 3 that were posted on the website of the city's stock exchange.

Proceeds from the sale will be used to expand businesses including wealth management, margin financing and investment banking, Orient said.

Chinese brokerages are raising capital after last year's rally in equities pushed the amount of money clients borrowed for stock investing to record levels. Outstanding margin loans at the nation's brokerages totaled 1.15 trillion yuan (US$183 billion) as of Feb 26, almost triple the amount at the end of June last year, China Securities Finance Corp data show.

Orient Securities expects its first-time share sale to raise about 10 billion yuan, according to the offer documents. The deal could be China's largest IPO since Power Construction Corp's 13.5 billion yuan offering in September 2011, according to data compiled by Bloomberg.

Shanghai-based Orient Securities is joining rivals Guosen Securities Co. and Dongxing Securities Co in tapping the equity market for capital even as last year's world-beating stock rally eases.

The benchmark Shanghai Composite Index gained 1.7 per cent this year after surging 53 per cent in 2014.

State-owned Shenergy Group Co owns 38 per cent of Orient Securities, according to Orient's IPO prospectus. Everbright Securities Co is the lead underwriter for the share sale.

Citigroup owns 33 per cent of Citi Orient Securities Co, which the US firm started with Orient Securities in 2012, according to the joint venture's website.

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