By Prudence Ho 

HONG KONG--Chinese brokerage Huatai Securities Co. plans to seek approval for a Hong Kong initial public offering that could raise as much as $3.5 billion.

Should Huatai list its stock, the IPO would be the third-largest globally this year, after a $4.8 billion February listing by Spanish airport operator Aena SA in Madrid, and a $4.1 billion Hong Kong IPO by GF Securities Co. earlier this month.

Shares in GF, China's fourth-largest broker by assets, rose 35% when they began trading. Orient Securities Co., a smaller Chinese brokerage, launched a heavily oversubscribed Shanghai IPO that raised US$1.6 billion last month.

Huatai is planning to seek approval from Hong Kong Exchanges & Clearing Ltd. next week for a Hong Kong listing that could raise between $3 billion and $3.5 billion, people familiar with the situation said Monday. If the firm gets approval, it will start gauging investor appetite in May and list in Hong Kong in June, the people said.

The Huatai offer could help cement Hong Kong's position as the top global listing destination. The city is currently the top venue for new listings in terms of fundraising value, followed by Shanghai and London, according to Dealogic.

Besides Huatai, other securities firms planning to list in Hong Kong include Guolian Securities Co., a smaller securities firm that is Royal Bank of Scotland Group PLC's partner in China.

Some already-listed brokerages are looking to sell shares to take advantage of the current bull market for Chinese stocks. Citic Securities Co., the largest brokerage in China, and China Galaxy Securities Co., which are already listed in Hong Kong, have announced plans to sell shares worth--at most--$10 billion in private placements.

In a private placement, shares are sold to no more than 10 investors.

Investors expect Chinese brokerages will benefit from current market strength in both mainland China and Hong Kong. The Hang Seng Index, the market benchmark in Hong Kong, which has a strong weighting of mainland stocks, rose to fresh seven-year highs Monday. Chinese regulators spurred the rally by allowing mutual funds to buy shares in the city using a new trading link, starting in March.

The brokerage firms, which also underwrite IPOs, are also expected to benefit from a faster pace in approvals of listing applications this year in China.

Huatai's unit Huatai Financial Holdings (Hong Kong) Ltd, J.P. Morgan Chase & Co. and UBS AG are the lead banks for the deal.

Write to Prudence Ho at prudence.ho@wsj.com

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