Bloomberg News

Temasek, KIA Said Among Investors in Citic Securities Sale

September 15, 2011

(Updates with institutional demand in third paragraph.)

Sept. 15 (Bloomberg) -- Temasek Holdings Pte and Kuwait Investment Authority are among early investors who agreed to buy $900 million of stock in Citic Securities Co.’s initial share sale in Hong Kong, two people with knowledge of the matter said.

The Singaporean state-owned investment firm will invest $150 million in the offering, while the Kuwaiti sovereign wealth fund is putting in $200 million, said the people, who declined to be identified as the process is confidential.

Citic Securities has received orders for all the stock available to institutional investors, which accounts for 90 percent of the offering, the people said. The offering of 995.3 million shares may raise 12.2 billion yuan ($1.9 billion), based on the company’s closing price of 12.27 yuan in Shanghai today.

Citic Securities, China’s biggest brokerage by market value, and rival Haitong Securities Co. are selling shares in Hong Kong to raise money for overseas expansion. Shares of Citic Securities have advanced nearly 10 percent in the past year in Shanghai, where the company went public in January 2003. Asia’s economic growth prospects are luring investors, CIMB Research Pte said.

“Looking beyond the near-to-medium term hazy outlook caused by the European sovereign debt crisis or patchy growth in the U.S., investors are fairly focused on stock ideas that come with a growth story,” said Song Seng Wun, a Singapore-based economist at CIMB. “Sovereign wealth funds that have long-term investment horizons and other similar-minded investors are probably looking at these with a fairly positive light.”

Developing economies accounted for 60 percent of the direct investments made by sovereign wealth funds last year, up from 53 percent in 2009, according to Monitor Group, which collects data on the funds.

Waddell & Reed Financial Inc., a U.S. mutual-fund manager, agreed to invest $300 million in the offering, while BTG Pactual SA, a Brazilian investment bank, will purchase $100 million of stock, the people said. China’s National Social Security Fund, Fubon Life Insurance Co. and Och-Ziff Capital Management Group LLC each committed $50 million to the offering, the people said.

The seven so-called cornerstone investors, who get guaranteed shares in the offering in return for a pledge not to sell their stock immediately, will together account for about half the size of Citic Securities’ sale, the people said.

Raymond Tang, a Beijing-based spokesman for Citic Securities, didn’t immediately respond to a phone call seeking comment on the cornerstone investors. Jeffrey Fang, a spokesman for Temasek in Singapore, declined to comment. A Kuwait Investment Authority official couldn’t be reached for comment.

--With assistance from Netty Idayu Ismail in Singapore, Fiona MacDonald in Kuwait and Mohammed Hadi in Hong Kong. Editors: Mohammed Hadi, Chitra Somayaji

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net


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