* IPO priced at HK$2.68/share, near bottom of indicative range
* IPO funds to expand margin finance, asset management, prop trade (Adds details from prospectus)
By Elzio Barreto
HONG KONG, May 12 (Reuters) - BOCOM International Holdings Company, the Hong Kong investment banking arm of China's fifth-biggest bank, priced its Hong Kong IPO near the bottom of expectations, underscoring the tough environment for financial companies in the Asian financial hub.
The company, a unit of Bank of Communications Co Ltd (BoCom) , priced the 667 million shares on offer at HK$2.68 each, after marketing the deal in an indicative range of HK$2.60 to HK$3.10 per share, BoCom said in a securities filing on Friday.
That would put the total deal at HK$1.79 billion ($230 million).
The stock will debut on the Hong Kong stock exchange on May 19.
Shares of financial services companies have risen about 9 percent so far in 2017, lagging far behind the 14.3 percent gain in Hong Kong's broader market index as investors fret about the effects of a slowdown in China on non-performing loans and stock market trading activity.
BOCOM International plans to use 45 percent of IPO proceeds to expand its margin financing business, looking to increase its share of the market in Hong Kong for lending to brokerage clients. That had nearly tripled at the end of 2016 to HK$171.6 billion ($22 billion) from HK$58.8 billion in 2012, the company said in the IPO prospectus.
It is setting aside another 15 percent of the IPO funds to expand its asset management and advisory business and the remainder to develop its technology infrastructure, proprietary trading and on new hiring.
BOCOM International secured about $83 million from five cornerstone investors in the deal, including $30 million from Hong Kong-based Kaiser Private Equity Fund and $10 million each from Da Cheng International Asset Management and from the overseas investment arm of state-owned gold miner Shandong Gold Group.
The company hired its BOCOM International (Asia) unit, China International Capital Corp Ltd (CICC), China Securities (International) and Haitong International as joint sponsors of the IPO. CITIC CLSA, HSBC and eight other banks also worked as joint bookrunners on the deal.
The banks stand to jointly earn about $5.3 million in fees, equivalent to a 1.8 percent underwriting commission and a 0.5 percent incentive fee, according to the IPO prospectus. ($1 = 7.7922 Hong Kong dollars) (Reporting by Elzio Barreto; Editing by Muralikumar Anantharaman)