Chinese bank takes early step towards IPO One of China's top investment banks has taken a step towards going public with China International Capital Corporation preparing the early ground work for an initial public offering to raise capital. Levin Zhu, chief executive of the brokerage, has commissioned an internal study to look into the possibility of listing, said people familiar with the matter. Mr Zhu, the "princeling" son of a powerful former premier, had long rebuffed suggestions that it list, wary of the disclosure requirements. But with the brokerage struggling to keep up with its rivals over the past few years, some in the firm now believe it needs to raise capital to remain in China's first tier. Jin Liqun, the new chairman of CICC, raised the possibility of an IPO at a recent town hall for CICC staffers in New York. The board has been mulling the advantages of going public, chief of which would be to have more balance sheet capability. "Over time, more balance sheet would give CICC more choices to grow," said one person with knowledge of the matter. CICC's rival Citic Securities has been public for a while now and has built a strong retail distribution business. A listing, likely in Hong Kong, would be many months away at the earliest and would require a shift in the current bearish stock market sentiment in China. CICC's strong point had been its equity capital markets business. But with the great wave of listings of the big national champion state-owned enterprises a thing of the past and the Chinese stock market in the doldrums, CICC needs to turn to new, more capital intensive activities such as sales and trading, the person with knowledge of the matter added. CICC bankers say the firm was slow to shift its focus to underwriting the smaller deals that dominated the Chinese market over the past few years and that it was also behind its peers in developing retail brokerages. CICC's shareholders include private equity firms KKR and TPG, which bought Morgan Stanley's 34 per cent stake in the bank at the end of 2010 for about $1bn. Both Henry Kravis of KKR and TPG's David Bonderman sit on CICC's board. KKR and TPG have since marked down the value of their investment by about half, in a reflection on both the fact that CICC and the industry generally have been hurt by ailing stock market conditions. CICC was China's top underwriter in 2009, but with it has faded since then. Last year it ranked 14th in China with Rmb2.4bn ($392m) in operating revenues. That was well below the number one ranked underwriter Citic Securities, which had Rmb7.9bn of operating revenues, according to the Securities Association of China. CICC had net profits of Rmb279.6m last year, ranking 29th among China's investment banks, while top-ranked Citic Securities had net profits of Rmb3.1bn. Mr Zhu has resisted the idea of an initial public offering partly because of the disclosures necessary regarding CICC's pay for top executives. To retain staff, the firm has given out "shadow equity" and allowed some to cash out at the time of the sale of the Morgan Stanley stake. Mr Zhu himself has earned more than his counterparts at other securities firms and banks that are more directly government controlled, making the issue a sensitive one, these people add. An official in the CICC news office said she had "no knowledge" of talks about whether to list. In the absence of underwriting activity, Chinese securities companies have been trying to develop asset management businesses. In April, CICC launched a global hedge fund of fund business targeting qualified Chinese investors. The company continues to ramp up its international presence as well. Mr Jin joined CICC from the Chinese sovereign wealth fund CIC a few months ago. CIC is itself the biggest shareholder in the bank, with a 43 per cent stake.