ABC set to price HK shares
By Fang Yan and Maggie Lu |
June 24, 2010, Thursday
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Print Edition
Print Edition
THE Agricultural Bank of China will price the Hong Kong part of its likely record US$23 billion share offering at no less than HK$2.80 (36 US cents) a share, a top executive was quoted as saying by a Chinese financial newspaper yesterday.
ABC Vice President Pan Gongsheng was quoted by the 21st Century Business Herald as responding to comments by an unnamed investment banker, who had said the Hong Kong offer would be set at HK$2.80 a share.
That would represent a price-to-book multiple of 1.7 times, the report said.
"People expected pricing to be somewhere around this level, because it could not be priced too low and also because market sentiment has improved quite a lot," said Alex Wong, a director at Ample Finance.
ABC, the last of China's four big state banks to go public, is selling a 15 percent stake in a dual listing in Hong Kong and Shanghai as it looks to replenish its capital.
The bank started pre-marketing the initial public offering to potential Chinese investors last week and is scheduled to begin taking subscriptions on July 1, before setting the IPO price on July 7.
ABC, headed by Xiang Junbo, has said it hoped to wrap up pricing consultations with potential investors yesterday.
An unnamed person involved in the deal was quoted by the newspaper as saying the suggested Shanghai A-share IPO price was 2.60-2.70 yuan (38-40 US cents). Pan was cited as saying the A-share price was "basically set."
The Hong Kong portion of the IPO aims to raise up to US$14.4 billion, including a 15 percent over-allotment option, according to a term sheet obtained by Reuters.
The Hong Kong listing, expected on July 16, a day after the shares debut in Shanghai, had already signed up Asia's third and fourth-richest individuals as cornerstone investors, according to a report.
ABC, founded in 1951 as the central bank's rural arm, is expected to top the Industrial and Commercial Bank of China's record US$21.9 billion IPO in 2006.
The Beijing-based bank will offer 25.4 billion shares in Hong Kong and 22.2 billion shares in Shanghai - 8 percent and 7 percent of its enlarged share capital, respectively.
China began listing its banks overseas since 2005, and there has been huge demand for their shares as investors view the sector as a proxy for the country's more than 8 percent economic growth. Recent signals of more yuan flexibility have also helped build confidence in the ABC offering.
But investors have had to weigh those positives against the ABC's non-performing loan ratio of 2.9 percent in 2009, and a valuation that has been made less attractive by volatile stock markets.
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