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Galaxy seeks special IPO approval
Last Updated(Beijing Time):2007-08-15 09:47
China Galaxy Securities Co is seeking special regulatory approval to conduct an initial public offering as early as next year in a bid to catch up with rivals to tap public funding for expansion, sources said yesterday.

The Beijing-based broker, which is set to make a profit for a second straight year in 2007, needs special approval as the stock watchdog requires three years of profits before allowing an IPO, according to sources briefed on the matter.

Galaxy Securities, the country's third-biggest broker, also has to resolve more than one billion yuan (US$132 million) of debt with its former clients before the stock flotation, the sources said.

"The broker hopes to rev up preparation for an IPO as a lot of its rivals are set to float this year or the next," said a brokerage source close to the firm. "As the market continues to boom, every player in the industry needs funds to expand as quickly as possible."

Officials at Galaxy Securities were not available for comment yesterday.

Galaxy Securities late last year won a government bailout to transform into a shareholding group after a four-year share slump resulted in financial trouble for the firm.

Central Huijin Investment Co, an arm under China's central bank, had agreed to pump in 5.5 billion yuan in the restructured Galaxy Securities while the Ministry of Finance would invest 1.5 billion yuan.

After the revamp, a new company called China Galaxy Financial Holding Co was set up to win a majority stake in Galaxy Securities as well as a proprietary trading unit and an asset management unit.

Galaxy Securities earlier this year agreed to settle debts with a raft of companies including Shanghai Pharmaceutical Co with stakes in the revamped brokerage, according to earlier corporate statements.

But sources said the broker would be likely to repay the remaining creditors with cash as a two-year stock market boom has bolstered its profitability. The broker logged a net profit of 1.17 billion yuan in the first half of the year.

Chinese stock regulators are urging the country's biggest brokers to seek public listings to boost competition before the nation fully deregulates the market to foreign players.

Haitong Securities Co early this month became the first mainland broker to list publicly in four years after it acquired Shanghai Urban Agro-business Co for a backdoor issuance.

A string of brokerage houses such as Guotai Jun'an Securities Co and China Merchants Securities Co are on track to seek an IPO by the end of this year, according to the sources.

Source:Shanghai Daily 
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