Center

CSRC to review ICBC A shares sale

By Fei Ya (China Daily)
Updated: 2006-09-26 14:02

China's securities regulator is expected to review the Industrial and Commercial Bank of China's (ICBC) A shares sales application today.

The review comes after the country's biggest lender won approval to issue H shares in Hong Kong on Thursday.

The Public Offering Review Division of the China Securities Regulatory Commission (CSRC), responsible for the review of issuers' legal documents on public offering and other application materials in terms of financial and accounting affairs, is expected to come to a final decision on whether the bank can be listed on the Shanghai bourse.

ICBC plans to raise about US$14 billion by selling 35.4 billion shares in Hong Kong and US$5 billion by offering 13 billion shares at the same time in Shanghai, it said in a shares sale document posted on the CSRC's website late on Friday.

The combined offering may surpass Japan's premier mobile communications company NTTDoCoMo's US$18.4 billion sale of stock in 1998 to become the world's largest IPO.
If approved, the listing will make the Shanghai stock exchange's market capitalization rise from 3.8 trillion yuan (US$475 billion) to more than 5 trillion yuan (US$625 billion).

"It will test whether the A shares market, after 17 months' securities reform to convert non-tradable State-owned shares to tradable ones, has enough liquidity to stand its largest IPO so far," said Haitong Securities analyst Zhang Qi.

Fourteen institutional investors have clinched a preemption deal with the lender to purchase a combined HK$27.2 billion (US$3.49 billion) of H shares in the first round of subscriptions. The shares are supposed to be purchased at the IPO price and the investors will not be allowed to sell them for one year.

China Life Insurance, the country's biggest life insurer, made a HK$4.4 billion (US$564 million) purchase of shares in the preemption. And dozens of well-known Hong Kong companies run by billionaires such as Li Ka-shing and Lee Shau-kee have each subscribed for HK$1.6 billion (US$205 million) shares from the lender.

The Government Singapore Investment Corporation (GIC) has also signed up for HK$2.8 billion shares, an industry source close to the Hong Kong Exchange said yesterday.

The bank also said in its sales document that it may sell as much as 65 billion yuan (US$8.13 billion) of subordinated bonds in a preparation for October's IPO. It has received approval to sell 100 billion yuan (US$12.5 billion) of bonds before the end of 2007.

The lender sold 35 billion yuan (US$ 4.38 billion) of long-term debt to raise funds to prepare for the IPO in 2005.

Analysts said CSRC will probably approve the sale, adding that China's regulator is encouraging its biggest banks to sell stock to improve their finances so they can compete with global lenders.

The lender's net income may increase to at least 47.2 billion yuan (US$5.9 billion) in 2006 from 37.4 billion yuan (US$4.7 billion) a year earlier, based on domestic accounting standards, the country's largest lender said in its shares sale document.