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Capital Markets

Haitong set to break Asian IPO impasse

HK listing could ignite ECM market

Haitong Securities is on the brink of breaking the long standing deadlock in Asian equity capital markets by launching a $1.5 billion public share offering as early as next week in Hong Kong. 

Sources close to the firm say the floatation, which has already secured many of the necessary regulatory approvals, could go ahead next week although the final decision to proceed will depend on market conditions. 

Asian markets have been displaying heightened volatility in recent months against the backdrop of worries over Chinese growth, continuing strife in the Middle East, the eurozone crisis and wider geopolitical uncertainty. 

As a result, the pipeline for Asian IPOs, while full, has become blocked as companies and their advisors remain wary of pulling the trigger in such choppy markets. 

Several Hong Kong-based ECM bankers said recently they were confident that the year would pan out well in terms of volume of public offerings and that one large deal successfully brought to market could be the fillip the market requires. Many banks in Asia rely heavily on the contribution of their equity capital markets business to overall revenues; when deals are thin on the ground they can quickly feel the squeeze. 

The price range for the float of Haitong, the second largest brokerage in China after Citic Securities, will be discussed over the weekend; the company, already listed in Shanghai, is expected to sell a billion shares. 

More than half of the shares are expected to go to so-called cornerstone investors, who are guaranteed large allotments in IPOs. 

Late last year, Haitong postponed a proposed $1.67 billion public share sale amid tumult in global markets. 

JPMorgan, Haitong International and UBS are acting as joint global coordinators on the deal. The Hong Kong Stock Exchange gave its approval for the Haitong IPO in late March. 

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