Legend Holdings, the largest shareholder of personal-computer maker Lenovo Group, is joining the queue of Chinese financial companies with plans to tap Hong Kong capital markets by filing a listing application for a $3 billion IPO with the Hong Kong Stock Exchange.
Beijing-based Legend, an investment group focused on IT, financial services and agriculture, is the latest mainland firm to apply for a Hong Kong IPO and joins several Chinese banks, brokerages and insurers that plan to raise an aggregate $18 billion through listings in the city.
Among the other companies with jumbo-sized IPO ambitions are HTSC, which plans to raise $3 billion in a July listing, China Huarong Asset Management, targeting a $2.5 billion float, and China Reinsurance, which hopes up to raise up to $4 billion. Both China Huarong and China Reinsurance are looking at the second half of the year to launch their public offerings.
Legend’s debut comes at a time when China is opening its financial markets and loosening controls on cross-border capital flows in the hopes of envigorating the economy amid a slowing economic growth rate.
The recent rallies on China's capital markets have triggered investor enthusiasm for the financial services sector. The major indexes in Shanghai, Shenzhen and Hong Kong stock markets all hit eight-year highs in terms of valuation level this month.
China’s fourth largest broker GF Securities raised roughly $4.1 billion via its Hong Kong debut at the end of March; shares in the brokerage have surged 62% in the four trading days since its listing.
Legend plans to use proceeds from the IPO to fund strategic investments in industries with high growth potential, such as consumer and service-related sectors, according to a filing with the Hong Kong exchange yesterday. The company also plans to use part of the proceeds to pay back Rmb2 billion in corporate bonds due in October.
CICC and UBS are joint sponsors of the listing.
Legend was established in 1984 by the Chinese Academy of Sciences, the a state-linked scientific research body under the auspicies of the State Council, which maintains a controlling 36% stake in the company as of December 31. Legend’s employees own 32.9% through two companies, while Hong Kong-listed investment conglomerate China Oceanwide has a 20% shareholding.
Legend holds a 30.6% stake in Hong Kong-listed computer maker Lenovo Group Ltd, the world's biggest personal computer maker by shipments which acquired IBM in 2005. It also owns private equity firm Hony Capital and venture capital firm Legend Capital.
Legend’s revenue and profit increased at a CAGR of 13.1% from Rmb2.26 trillion to Rmb2.89 trillion and 34.8% from Rmb2.29 billion to Rmb4.16 billion in the past three years, respectively, according to the exchange filing.