Investment banks ready for resumption of new issues

Brokerages' revenue expected to double in 2014 as firms go public

Investment bankers are eager to get back to work after China's top securities regulator promised to reopen IPO listings in January following a 14-month hiatus.

Wind Information Co Ltd, a financial information provider, forecast that the country's brokerages will rake in 16.4 billion yuan ($2.69 billion) more in 2014 if 300 companies go public.

The brokerages registered 78.5 billion yuan in revenue in the first half this year, with 8.3 billion yuan coming from investment banking firms. If they maintain their pace in the second half, total revenue in 2014 will double, Wind Information said.

Data show that brokerage commissions from IPOs stand at about 5 percent of total funds raised. The average IPO in China is around 1.1 billion yuan.

Investment bankers are ready to pull all-nighters again after 14 sleepy months. "The past year feels like a long vacation for us, clocking out at 3 pm every day. But now things have gone back to normal again, which means 100 working hours a week. You kind of miss it after such a long vacation," said one IPO sponsor in Shanghai who declined to be identified, citing corporate policies.

Fu Lichun, chief greater China economist with the Golden Fortune International Group, told the China Securities Journal that the IPO market will see a blowout next year.

"IPOs have been halted for so long, there are many backlogs to be dealt with," he said.

The China Securities Regulatory Commission, China's top securities regulator, vowed on Nov 30 to allow at least 50 companies to float shares by next January, as it rolls out a guideline on revamping the country's IPO system for the fourth time.

The reform is part of a transition toward the US-style registration IPO system that Beijing promised to put in place by 2020. Currently, IPOs are subject to approval by CSRC.

More than 760 IPO candidates are now in the pipeline, and the CSRC said it will take almost a year to assess all of them.

More than 80 already have been assessed and are waiting for a final call to list shares.

Among the country's brokerages China Merchant Securities and Haitong Securities are underwriters for the biggest number of candidates.

CITIC Securities Co Ltd, however, has underwritten the largest amount, totaling 12.7 billion yuan, as most of its candidates are on the main board, where IPO sizes are bigger.