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July 16, 2016

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BOCom up on possible IPO for HK subsidiary

SHARES of Bank of Communications rose in Shanghai yesterday after reports suggested that its overseas advisory arm in Hong Kong may launch an initial public offering.

BOCom’s shares added 0.36 percent to 5.62 yuan (84 US cents), due to reports of a possible IPO by BOCom International Holdings Co, a unit of China’s fifth-largest lender.

The company is considering listing by the first quarter of next year to raise about US$200 million, according to Bloomberg News and Beijing Business Today. BOCom and BOCom International didn’t immediately return comment to Shanghai Daily.

The deal would make the lender, which is part-owned by HSBC Holdings, the first of five biggest Chinese lenders to list an investment-banking unit. BOCom’s annual report showed the unit’s profit was HK$350 million (US$45.1 million) last year.

The spin-off was seen as BOCom’s attempt to seek higher valuation and a broader channel of fundraising, analysts said.

“It’s a hard option for banks to split business to raise funds under current market situation and cooling profit growth,” said Lu Suiqi, vice dean of the Department of Finance at the School of Economics at Peking University.

The Industrial Bank, China Citic Bank and Shanghai Pudong Development Bank have, or will, split their credit card units or wealth management business with an eye toward a potential IPO.


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