Guotai Junan on Plans to Raise $480 Million

One of the largest investment banks and securities in China just announced its intentions to raise approximately HK$3.729 billion. Guotai Junan International Holdings Limited offered one out of every three existing shares held on February 7, 2020.

The company, part of Guotai Junan Securities, offers a subscription fee of HK$1.45 per rights share.

Guotai will issue a minimum number of 1,919,219,266 rights shares to a maximum of 2,571,891,028 rights shares.

Approximately 33 percent of the net proceeds for loans and advances will go to market-making and investment in debt securities. About 9% will be used for IT infrastructure and the Group’s expansion to Southeast Asia.

Further, the firm disclosed that around 15 percent of the net proceeds are for debt repayment.  10% will then go to the Group’s general working capital, which includes expenses on professional advisory services regulatory compliance, etc.

Guotai Junan Group provides brokerage, corporate finance, asset management, loans, and financing services. It also offers financial products and market making investments.

China’s regulator, the China Securities Regulatory Commission, supervises the Mainland-owned securities brokerage house. The company’s public offering was the first to get listed on the Main Board of the Stock Exchange.

Guotai Group in Singapore

The company claims that it has established subsidiaries in Singapore since 2015. It successfully commenced businesses in asset management, securities brokerage, fixed income, and wealth management in the region.

The net proceeds from the Rights Issue will provide the Group with necessary funding resources to expand businesses in Singapore. As a result, this includes upgrading trading systems, input in cybersecurity, and AML surveillance systems.

All the regulated activities in Singapore should comply with capital requirements under the local laws and regulations.

The proposed Rights Issue will not increase the Group’s issued share capital or its market cap by more than 50%. The Listing Rules do not require this to be approved by its shareholders in general meetings.