HONG KONG - Citic Securities Co Ltd, China's largest publicly traded brokerage, could raise up to $1.94 billion with a Hong Kong share offering to fund expansion in international markets, according to a term sheet of the deal seen by Reuters on Sept 16.

The company is offering 995.3 million shares at an indicative price range of HK$12.84 to HK$15.2 each, putting the total deal size as high as HK$15.13 billion ($1.94 billion), according to terms of the offering.

The deal will be the first major financial stock offering to hit Hong Kong's equity capital market after it ground to a halt in the past two months with no share sales because of volatile markets.

Citic Securities has enough commitments from cornerstone and anchor investors to fully cover the deal, four sources said on Sept 15.

The Shenzhen-based company likely benefited from demand of investors betting on growth in China's capital markets and its unique position as the only Chinese mainland broker to be listed in Hong Kong.

Still, increased competition in the sector and a grim short-term outlook for global equities could put a dent on Citic Securities shares, analysts said.

"There are no Chinese mainland brokerages listed in Hong Kong, so they benefit from that," said Ivan Li, an analyst at Kim Eng Securities in Hong Kong.

"At the moment, market sentiment is very weak, even in Asian markets. Also, competition is very keen on the China market, putting pressure on commission rates," he added.

Securities companies in China are forecast to post annual profit growth of nearly 20 percent between 2011 and 2013, buoyed by an increase in capital markets activity and new businesses such as margin financing and private equity investments, according to BOC International estimates.

Financial offerings

Insurers, brokerages and banks, including Citic Securities, Haitong Securities, New China Life and China Guangfa Bank, have unveiled plans to raise $35.4 billion in stock offerings in Hong Kong and the Chinese mainland in coming months.

Chinese consumer companies, including Tea maker Tenfu Holdings Co Ltd and shoe retailer Hongguo International Holdings Ltd, launched $485 million worth of IPOs in recent days in Hong Kong.

Construction company Sany Heavy Industry Co Ltd will also begin marketing its up to $3.5 billion Hong Kong offering on Sept 19.

The Citic Securities price range is equivalent to a discount of 13.3 percent to a premium of 2.6 percent to the reference price of 12.16 yuan for Citic Securities' Shanghai-listed A-shares.

The company will start an investor roadshow for the deal, with pricing set for Sept 28.

Singapore state investor Temasek Holdings Pte Ltd , Kuwait Investment Authority, Fubon Life Insurance, Brazilian investment bank BTG Pactual and US-based hedge fund Och-Ziff Capital Management were among the cornerstone investors.

US asset manager Waddell & Reed committed the biggest chunk of $300 million.

China's national pension fund NSSF was originally among the cornerstone investors, but couldn't get all its paperwork cleared on time, a source with direct knowledge of the deal told Reuters. The paperwork is expected to be finished on Sept 20.

Such investors back many Asian listings, committing to buy large, guaranteed stakes and agreeing to a lock-up period during which they will not sell their shares.

Anchor investors, who unlike cornerstones don't have to keep their stakes for a fixed amount of time and also get no fixed allocations, placed orders covering the remainder of the deal, said the four sources, who couldn't be named because details of the deal weren't yet public.

Citic Securities is the sole global coordinator of the offering, with a group of banks, including BOC International, CCB International, Bank of America Merrill Lynch and Credit Agricole's CLSA unit also helping to underwrite the deal.