Guotai Junan to Raise $480 Million via a Rights Issue

Guotai Junan Securities is one of the largest investment banks and securities companies in China.

Guotai Junan International Holdings Limited, part of Guotai Junan Securities, announced this Monday that it intends on raising approximately HK$3.729 billion ($478.4 million) via a rights issue.

Guotai Junan Securities is one of the largest investment banks and securities companies in the People’s Republic of China. As part of the rights issue, the company offers one rights share for every three existing shares held on February 7, 2020, at the subscription price of HK$1.45 per rights share.

The company will issue a minimum number of 1,919,219,266 rights shares, and a maximum number of 2,571,891,028 rights shares, the statement filed through the Hong Kong Exchanges and Clearing Limited (HKEX).

Guotai Junan Group provides services in brokerage, corporate finance, asset management, loans, and financing, as well as financial products, market making, and investments. 

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The company is the first Mainland-owned securities brokerage house with approval from China’s regulator, the China Securities Regulatory Commission (CSRC), to list its initial public offering on the Main Board of the Stock Exchange.

How will Guotai Junan International use the proceeds?

With the money the financial company raises, it plans to use approximately 33 percent of the net proceeds for loans and advances to customers, and about 33 percent will go towards market-making and investment in debt securities, the statement from the company said.

Furthermore, the firm disclosed that around 15 percent of the net proceeds would be used for debt repayment, and 10 percent will go to the Group’s general working capital, which includes expenses on professional advisory services, trading, and back-office system enhancement, regulatory compliance and more. Approximately 9 percent will be used for IT infrastructure and expansion into Southeast Asia.

“…the estimated net proceeds of the Rights Issue will be approximately HK$2,779.56 million,” the statement said. “Accordingly, HK$918.15 million will be used for loans and advances to customers, HK918.15 million will be used for market making and investment in debt securities, HK$417.34 million will be used for debt repayment, HK$278.22 million will be used as general working capital as specified above and HK$247.70 million will be used for IT infrastructure and regional expansion in Southeast Asia.”

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