By Samuel Shen and Jacqueline Wong

SHANGHAI, Nov 27 (Reuters) - China's stock regulator said it would review on Monday Huatai Securities' application for a domestic initial public offering, which analysts said could raise at least 10 billion yuan ($1.5 billion).
Huatai, which owns a fund venture with American International Group Inc, follows smaller rivals Everbright Securities Co and China Merchants Securities Co in launching an IPO this year, as brokerages capitalise on a stock market revival that has seen China's benchmark index up more than 70 percent.
"Brokerages need more capital to expand and also prepare for financial innovations next year, such as margin trading and short selling," said Tian Liang, analyst at Ping An Securities Co. "We expect to see a slew of brokerage IPOs coming."
Chinese brokerages have raised 35 billion yuan so far this year via IPOs and additional share sales, while more companies, including Guosen Securities, Galaxy Securities Co and Western Securities Co are likely to follow suit soon, Tian said.
Huatai Securities, a mid-sized brokerage house, said late on Thursday that it intended to issue 985 million A shares, equivalent to 16.98 percent of its enlarged equity capital.
The brokerage, which earned a net profit of 1.25 billion yuan, or 0.22 yuan in 2008, would raise more than 10 billion yuan, if its IPO is priced at 50 times its reported earnings.
Huatai would use the IPO proceeds to boost operating capital, and strengthen its investment banking, brokerage and asset management businesses, according to its sales prospectus.
Huatai holds a 49 percent stake in AIG-Huatai Fund Management Co, and also owns a stake in China Southern Fund Management Co.
The company has in the past three years acquired two smaller brokerages, and is the second-biggest shareholder in privately-held Bank of Jiangsu.

(US$1=6.832 Yuan)

(Additional reporting by Fang Yan and Ed Klamann; Editing by Jacqueline Wong)

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