Chinese securities firms are lining up to tap domestic equity markets, with one brokerage likely to post China's biggest initial public offering in four years if it receives listing approval, the latest batch of IPO applications shows.
The China Securities Regulatory Commission (CSRC) published a third batch of application prospectuses for 19 firms on its website on Tuesday evening, bringing the total to 65 applicants over the last five days.
One firm, Guotai Junan Securities Co, has applied for an IPO in Shanghai that could raise nearly 22 billion yuan ($3.5 billion), according to Reuters calculations.
Reuters arrived at the figure by multiplying the company's projected earnings per share with the number of shares it hopes to issue, and then with the median forward 12-month price-to-earnings ratio for its 20 listed peers.
If approved, that would make Guotai, China's third-largest brokerage by profit, the largest listing in the country since Agricultural Bank of China (AgBank) debuted in July 2010.
AgBank raised around $11 billion in Shanghai and another $11 billion in Hong Kong through a dual listing, the current record.
State-owned Guotai plans to use the funds raised to advance the financial services it provides, improve its underwriting capabilities and broaden its asset management business, among other things, according to its draft prospectus.
China Galaxy Securities Co, Huarong Securities Co and Ping An Securities will underwrite the IPO, according to the prospectus.
Among other applicants, Orient Securities is aiming to raise about 7 billion yuan and Dongxing Securities is seeking around 5 billion yuan, based on the same calculation method.
Analysts say the time could be ripe for brokerages to expand given the potential opportunity for new business from a pilot scheme that will allow cross-border stock market investment between Shanghai and Hong Kong.
Chen Xingyu, an analyst at Phillip Securities (Hong Kong), said that how the pilot is implemented will be a major factor in the reception that brokerages like Guotai receive.
