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ICBC's rights to seek US$6.8b
Source: Agencies |
November 12, 2010, Friday
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Print Edition
Print Edition
THE Industrial and Commercial Bank of China plans to raise 45 billion yuan (US$6.8 billion) via a rights share offering this month, capping an US$80 billion fundraising boom by Chinese banks to build up capital depleted by last year's lending spree.
ICBC, which first unveiled its rights issue plan in July, will now be selling fewer rights shares in Hong Kong and Shanghai because of a rise in their stock market value since then.
Investors will be entitled to 0.45 share for every 10 held, meaning it could issue up to 15.03 billion new shares, compared with its earlier plan to issue up to 0.6 share for every 10 held, or 20.04 billion shares.
ICBC's Shanghai shares are up 8 percent since July and its Hong Kong shares have risen 15 percent.
The world's most valuable lender priced the issue at 2.99 yuan per share in Shanghai, and the equivalent price of HK$3.49 (45 US cents) in Hong Kong - a discount to the market price of 37 percent and 47 percent, respectively. The discounts are more or less in line with those offered by smaller rivals China Construction Bank and the Bank of China, which are raising a combined US$18.2 billion. CCB priced its offer at a 27-43 percent discount to market price, while BOC priced it a 34-41 percent discount.
The steep discount to market prices would give ICBC shareholders more of an incentive to participate in the rights issue, according to Jin Lin, analyst at Orient Securities. "It will give investors the impression that participating in the rights issue would be a bargain," Jin said, adding that eventually the overall wealth of investors would not change as the new issuance should drag down ICBC's share prices.
Investors generally welcomed the move, but ICBC's shares were overshadowed to some extent by the central bank increasing banks' required reserves amid inflation worries.
ICBC shares closed 2.87 percent higher at HK$6.82 yesterday in Hong Kong and added 0.63 percent in Shanghai to finish at 4.77 yuan.
Most other listed banks in China, such as the Bank of Communications and China Merchants Bank, completed fundraisings earlier this year, as regulators tightened capital rules after 2009's record US$1.4 trillion lending threatened banks' asset quality.
ICBC, which first unveiled its rights issue plan in July, will now be selling fewer rights shares in Hong Kong and Shanghai because of a rise in their stock market value since then.
Investors will be entitled to 0.45 share for every 10 held, meaning it could issue up to 15.03 billion new shares, compared with its earlier plan to issue up to 0.6 share for every 10 held, or 20.04 billion shares.
ICBC's Shanghai shares are up 8 percent since July and its Hong Kong shares have risen 15 percent.
The world's most valuable lender priced the issue at 2.99 yuan per share in Shanghai, and the equivalent price of HK$3.49 (45 US cents) in Hong Kong - a discount to the market price of 37 percent and 47 percent, respectively. The discounts are more or less in line with those offered by smaller rivals China Construction Bank and the Bank of China, which are raising a combined US$18.2 billion. CCB priced its offer at a 27-43 percent discount to market price, while BOC priced it a 34-41 percent discount.
The steep discount to market prices would give ICBC shareholders more of an incentive to participate in the rights issue, according to Jin Lin, analyst at Orient Securities. "It will give investors the impression that participating in the rights issue would be a bargain," Jin said, adding that eventually the overall wealth of investors would not change as the new issuance should drag down ICBC's share prices.
Investors generally welcomed the move, but ICBC's shares were overshadowed to some extent by the central bank increasing banks' required reserves amid inflation worries.
ICBC shares closed 2.87 percent higher at HK$6.82 yesterday in Hong Kong and added 0.63 percent in Shanghai to finish at 4.77 yuan.
Most other listed banks in China, such as the Bank of Communications and China Merchants Bank, completed fundraisings earlier this year, as regulators tightened capital rules after 2009's record US$1.4 trillion lending threatened banks' asset quality.
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