Chinese IPO fever is raging once more so it was only a matter of time before Everbright Securities, the state-controlled broker, dusted off shelved plans for an IPO.
China's tenth largest brokerage by market share plans to raise up to $1.6bn in a revived initial public offering in Shanghai.
Everbright Securities will offer 30% of the new shares to institutional investors directly and will sell the remainder to institutional and retail investors through a public bidding system.
The IPO will be the second by a Chinese brokerage following Citic Securities' $213m IPO in 2002. More on Citic is this post. Waiting in the wings are two more local brokers, and Industrial Securities and China Merchant Securities, which previously tried to IPO in 2007 — see this story.
Since Beijing allowed IPOs to resume in June the five companies that have gone public jumped by an average of 112% on their first trading day and all have sold their shares at the top of the range offered to investors.
Last week China State Construction Engineering raised $7.3bn in the world's largest IPO this year. Like other recent and prospective IPO candidates, it has a distinctively “old economy” focus.
Investors recognises that investment banks and construction firms are likely the biggest winners from the government's massive economic stimulus programme. After all, who better to exploit asset price bubbles and the excess liquidity sloshing around in the system?
But, as the FT warns, brokerage flotations are also sure sign of an overheating equity market.