The $20-billion initial public offer (IPO) of Industrial and Commercial Bank of China (ICBC), the mainland’s largest lender, drew intense interest on the its opening day, reports said on Tuesday.
The IPO — expected to be the largest to date — attracted a wave of international orders of up to $56-billion, according to reports in Hong Kong’s English-language press.
“Sponsors told us that ICBC’s offering is so hot that its order book was fully covered in the first hour,” a fund manager was quoted as saying in the South China Morning Post daily, which put orders at $39-billion.
The Standard, also quoting sources close to the deal, said orders had totalled $56-billion.
ICBC set a lower-than-expected price of 2,56/3,07 Hong Kong dollars ($33-39) for its offer in Hong Kong of 35,4-billion H-shares.
It will sell another 13 billion A-shares in Shanghai at the same price for its October 27 dual listing.
Zhang Qi, an analyst with Haitong securities based in Shanghai, said individual buyers held positive views on the company’s offering.
“First, the offering price is below investors’ expectations. Second, buyers always like to buy new stocks because they believe they can make money,” said Zhang.
“Third, foreign investors, most of whom are institutional investors, have an optimistic view on ICBC, not only because of China’s fast-growing economy, but also because they believe Chinese banks’ are determined to reduce [bad] debt.”
Under the terms of the IPO, the Beijing-based lender can increase the Hong Kong share offer, depending on demand, to 40,7-billion H-shares, with the Shanghai allotment similarly rising to 14,95-billion A-shares.
The final pricing will be set just before the listing.
According to previously published statements, the Kuwait Investment Authority is expected to take the largest single portion of the Hong Kong offer with an investment of 5,6-billion Hong Kong dollars.
It will be joined by several other top mainland Chinese and Hong Kong groups, including Cheung Kong and Hutchison Whampoa, both controlled by tycoon Li Ka-shing who will invest up to 1,6-billion Hong Kong dollars.
Among other overseas entities, the Qatar Investment Authority will also invest 1,6-billion Hong Kong dollars.
China International Capital, Citic Securities, Shenyin and Wanguo Securities and Guotai Junan Securities are the domestic underwriters.
ICBC selected investment banks Merrill Lynch, Credit Suisse, Deutsche Bank AG, China International Capital and ICBC unit ICEA Finance Holdings as underwriters for the Hong Kong share offering.
ICBC’s share sale makes it the third of China’s big four banks to list offshore after China Construction Bank, which floated in Hong Kong last year, and Bank of China, which listed in Hong Kong in June, and then in Shanghai in July. – AFP