(CapitalWatch, Sept. 13, New York) Zhong Yang Financial Group Ltd., a Hong Kong-based online brokerage, has filed to raise up to $30 million in a New York initial public offering.
Zhong Yang seeks to sell 5 million ordinary shares at $5 to $6 apiece on the Nasdaq Capital Market. Underwriters on the deal, Univest Securities and Valuable Capital Ltd., may acquire an additional 750,000 shares for over-allotment.
According to its prospectus, filed Friday with the U.S. Securities and Exchange Commission, Zhong Yang offers the trading of local and foreign equities, futures, and options products on platforms licensed from third parties to high-volume and -frequency trading institutional and individual investors in Asia. The company now uses Esunny for futures trading and 2Go for stock trading.
In the fiscal year 2021, Zhong Yang facilitated 9.6 million trades and counted 247 registered customers as of March 31. In the 12 months through March 2021, Zhong Yang booked $16.9 million in revenue, a 2% year-over-year increase, on doubled income of $5 million. The company had cash and cash equivalents of $4.9 million as of March.
In the U.S. markets, Zhong Yang will compete for investor capital against Chinese online brokerage platforms Futu Holdings Ltd. (Nasdaq: FUTU) and Up Fintech Holding Ltd. (Nasdaq: TIGR). Both have been publicly traded since the first quarter of 2019 – and Futu's performance has by far exceeded that of its rival in the market, its stock having closed at $100.93 per share Monday, more than double year-to-date and 559% above where it started.
With Futu and Up Fintech expanding their presence in China, Singapore, and the United States, Zhong Yang will have to prove its plans are as far-reaching as the two internationalizing brokerages. In its prospectus, Zhong Yang said it focuses on expanding in Southeast Asia, enabling trading on more than 100 futures products on exchanges around the world, including:
"The Chicago Mercantile Exchange (CME), Hong Kong Futures Exchange Limited (HKFE), The New York Mercantile Exchange (NYMEX), The Chicago Board of Trade (CBOT), The Commodity Exchange (COMEX), Eurex Exchange (EUREX), ICE Clear Europe Limited (ICEU), Singapore Exchange (SGX), Australia Securities Exchange (ASX), Bursa Malaysia Derivatives Berhad (BMD), and Osaka Exchange (OSE)."
Zhong Yang has filed for a U.S. IPO at a time of uncertainty for Chinese listings. As a small-cap company, it does not seem to face the same legal issues that a Chinese tech giant would – otherwise, it may not have received that relaxed treatment from Beijing. Over the past few months, several Chinese techs have canceled or postponed their U.S. listing plans, but if a Hongkongese firm does reach Wall Street, it just may be the small-cap brokerage Zhong Yang.
The IPO capital will fund the "development of Contract for Difference (CFD) products and services, acquisition and licensing, optimization of sales network and geographic coverage, purchase of IT equipment and software, and general corporate purposes, including working capital," Zhong Yang said.
The company has applied to float its shares under the ticker symbol "TOP."