GF Securities Co plans to raise as much as 18 billion yuan (US$2.66 billion) in a private share placement to replenish working capital and expand its core businesses.

The medium-sized brokerage will sell up to 600 million additional shares to at most 10 investors at more than 27.41 yuan apiece, it told the Shenzhen Stock Exchange yesterday.

"GF Securities has developed well after its listing in February 2010. But the smaller capital size prevented the company from opening more business to tap China's prosperous equity market," the company said.

The brokerage will use the proceeds to develop businesses such as investment banking, margin trading and short selling, optimizing trading outlets, proprietary business and stock index futures, it said in the statement.

Part of the funds will be used in acquisition of domestic rivals in appropriate time as domestic brokerages are facing a new round of competition when commission drops sharply, it said without revealing detailed plans.

"With the fast expansion of brokerages' trading outlets, the commission rate is very likely to drop 30 percent this year, so it's an important move for GF Securities to strengthen its capital and competitiveness via share sales at present," said Huang Lijun, an analyst at Hongyuan Securities.

Net assets of GF Securities totaled 15.37 billion yuan in June, only 30.8 percent of CITIC Securities and 35.8 percent of Haitong Securities.

The share placement comes on the heels of a recovery of the Chinese stock market. The CSI 300 Index has risen more than 10 percent since July to 2,865.97 points.