DOMESTIC brokerage Orient Securities Co., the joint venture partner of a Citigroup Inc. unit, has priced its initial public offering (IPO), which could raise more than 10 billion yuan (US$1.59 billion) in the largest domestic IPO since 2011.

    Orient Securities’ IPO comes amid concerns on China’s brokerages facing imminent competition from its banks after the securities regulator said Friday it is considering issuing brokerage licenses to banks. Brokerage stocks, as a consequence, had fallen yesterday.

    Brokerages like Orient Securities have seen profits double as retail investor numbers jump and trading volumes soar, spurred by the central bank’s surprise interest rate cut in November. China again cut interest rates this month.

    Volumes have also been boosted by the stock connect program, which opened the same month, allowing direct trading of Hong Kong and Shanghai stocks on each other’s bourses.

    Orient Securities is selling 1 billion shares at 10.03 yuan, it said in a prospectus posted on the Shanghai Stock Exchange’s website Tuesday, making it the largest IPO in China since Sinohydro Group Ltd. raised US$2.11 billion in September 2011.

    The funds will be used for working capital purposes and to expand business, among other things.

    Orient Securities’ IPO price gave it a price-to-earnings ratio of 22.98 times its 2014 profit on a diluted basis, far lower than an industry average of 76.17 times for the month up to March 6, according to the firm’s prospectus. (SD-Agencies)