[HONG KONG] Shares in China International Capital Corp (CICC) jumped as much as 11 per cent in their Hong Kong debut on Monday, after the country's oldest domestic investment bank raised US$811 million in an initial public offering.
CICC's strong start was helped by China's decision on Friday to resume IPOs after a four-month halt, which is set to bring in more revenue for investment banks. The stock had gained about 9 per cent in the gray market on Friday on the back of the IPO resumption news.
As of 0150 GMT, CICC stock was trading at HK$11.28, a little lower than the day's high of HK$11.38. The stock opened at HK$10.90 compared with the HK$10.28 IPO price, the top of its marketing range. The benchmark Hang Seng index was down 0.2 per cent.
The bank, established in 1995 as a joint venture between China Construction Bank, Singapore sovereign wealth fund GIC Ltd and Morgan Stanley, will use the funds to expand its equity sales and trading and wealth management businesses as well as to expand its international subsidiaries.
It counts global private equity firm KKR & Co and TPG Capital Management among its shareholders.
Domestic investment banks like CICC and rivals CITIC Securities and Haitong Securities are likely to be the biggest beneficiaries as IPOs resume in Shenzhen and Shanghai because homegrown firms underwrite the vast majority of those deals.
Underwriting IPOs and other equity deals account for about half of investment banks' revenue in Asia, compared with 20 per cent in the United States and 19 per cent in Europe.
The CICC IPO comes on the heels of two other large offerings in the city, underscoring an upswing in equity activity that investment bankers are counting on to boost revenue in Asia.