Chinese investment bank CICC to kick off Shanghai share sale as foreign competition increases

October 12, 2020.

China International Capital Corporation, China’s first joint-venture investment bank, will begin a preliminary price consultation Wednesday as the next step toward listing its shares on the Shanghai Stock Exchange, looking to raise funds as foreign rivals expand into the region.

Consultations will take place Wednesday in China to determine the issue price. , which already trades on the Hong Kong Stock Exchange, said it plans to issue up to 458 million A shares in the mainland offering, amounting to no more than 9.5% of its total share capital after the offering. 

Proceeds after fees will be used to increase CICC’s capital, replenish the company’s working capital and support developing domestic and overseas projects for CICC.

CICC said it will make further announcements as the final size and issue prices of the offering are determined. The China Securities and Regulatory Commission approved the offering on Sept. 25.

CICC said it expects “fierce” competition from foreign rivals who have advantages in global networks and capital strength, according to Reuters.

“If we cannot supplement our capital strength ... we face the risk of customer loss and market share shrinkage,” CICC said in a recent regulatory filing, Reuters reported.

The bank is nonetheless currently a major player in China. In August, Chinese fintech Ant Group said in a filing that CICC was one of the financial firms it had retained to assist it with the preparation of the company's blockbuster initial public offering on the Shanghai and Hong Kong exchanges.

During the last several years, China has been relaxing its rules to bring more foreign capital into its once-isolated financial markets. In July 2019, the encouraged foreign involvement in wealth management, insurance and other industries, and a month later, the State Administration of Foreign Exchange eliminated long-standing quotas for the Qualified Foreign Institutional Investor programs. 

China has also been encouraging mergers of the country’s brokerages, in an effort to fend off challenges by foreign firms such as and Morgan Stanley, which are seeking a stronger presence in the country as its financial sector welcomes more foreign players.

In September, Chinese news site Caixin reported that Goldman was in talks to take full ownership of its Chinese securities joint venture, Goldman Sachs Gao Hua Securities Company. Other global firms had made similar moves. In March, Morgan Stanley received approval to take a majority stake in its own China Securities joint venture, Morgan Stanley Huaxin Securities Company. Credit Suisse won approval in April to become the majority shareholder of Beijing-based Credit Suisse Founder Securities.

— Additional reporting by Zack Fishman, Tom Auchterlonie and Minyoung Park