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China Everbright Bank hopes 3rd time lucky with US$2.8b IPO in HK
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China Everbright Bank will be the third mainland lender in three months to raise funds in Hong Kong by launching an up to US$2.8 billion share sale today.
The bank and peers Huishang Bank and the Bank of Chongqing are building capital buffers in anticipation of a rise in bad loans as growth of the world’s second-biggest economy slows.
They have turned to Hong Kong in search of a wider pool of international investors but the shadow of bad loans has made many wary. In response, the banks have signed up so-called cornerstone investors who buy significant portions of the offered shares which they agree to hold for at least six months.
The banking unit of state-backed China Everbright Group is attempting to raise capital in Hong Kong for the third time after market conditions led it to abandon efforts last year and the year before.
China’s 11th-biggest bank by market capitalization said yesterday that it will offer 5.1 billion shares today at an indicative price of HK$3.83 to HK$4.27 each, to yield up to HK$21.8 billion (US$2.81 billion). The offer will be priced on Friday, with trading to start on December 20.
The offering would be Hong Kong’s biggest since China Petroleum and Chemical Corp, Asia’s largest refiner, raised US$3.1 billion in February.
The price range values the Shanghai-listed bank at a 2013 full-year forecast price-to-book ratio of 0.9 to 1.0 times, Thomson Reuters publication IFR previously reported.
China Everbright Bank received commitments worth US$1.74 billion from 19 cornerstone investors including China Shipping (Group) Co and Prudential Financial Inc, according to its prospectus released yesterday.
It hired China Everbright Securities, China International Capital Corp, Morgan Stanley and UBS AG for the offering.
The share sale would come soon after Huishang Bank and the Bank of Chongqing raised a combined US$1.92 billion. Huishang closed yesterday at HK$3.54 compared with a listing price of HK$3.53, and the Bank of Chongqing ended at HK$5.82 from HK$6.
Other Chinese banks including the Bank of Shanghai and China Guangfa Bank plan to list in Hong Kong within the next 12 months.
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