The world-record US$19.1 billion public offer by Industrial and Commercial
Bank of China (ICBC) was met with great enthusiasm by domestic and overseas
investors yesterday.
A man walks past a logo of the
Industrial & Commercial Bank of China (ICBC) in front of its local
branch in Hefei, east China's Anhui province October 16, 2006.
[Reuters] |
The bank, the largest by assets in
China, began accepting subscriptions from institutional investors for shares to
be listed in Shanghai and simultaneously launched an H-share public offering in
Hong Kong.
The initial public offering (IPO) represents about 15 per cent of the bank's
enlarged share capital.
Institutional investors in Hong Kong began applying for the stock a week ago
and, according to two people who were involved in the sale and did not want to
be identified, underwriters have already received orders for US$175 billion, or
more than 13 times the amount available to them.
ICBC is offering 1.77 billion shares, or 5 per cent of the total offering, to
Hong Kong retail investors. They have until midday on Thursday to place their
orders.
The bank makes its trading debut simultaneously in Hong Kong and Shanghai on
October 27.
The dual IPO, China's first, is expected to be the world's largest, exceeding
the 1998 stock sale by Japanese mobile phone company NTT DoCoMo, which raised
US$18.4 billion, according to market data provider Dealogic.
Around 138 domestic institutional investors, as many as 90 per cent of those
who participated in the bank's earlier price inquiry process, have made offers
to buy the bank's A shares.
"The active subscription of the bank's shares might finally lead its price to
be fixed as high as 3 yuan (38 US cents) per share," said Zhao Jianxing, an
analyst with Shenzhen-based China Merchants Securities. "And on the first
trading day it is likely to open at 3.4 or 3.5 yuan (44 US cents) per share," he
added.
The bank set its A-share price yesterday at between 2.6 yuan (33 US cents)
and 3.12 yuan (39 US cents) 1.95 times and 2.23 times its 2006 book value,
bankers involved in the sale said.
ICBC is offering 35.4 billion shares at between HK2.56 and HK$3.07 apiece in
its global offering.
The bank is scheduled to fix the final prices on October 23.
Thousands of Hong Kong residents lined up outside banks yesterday to apply
for the shares. Analysts estimated that retail investors in Hong Kong might pump
in a combined capital of HK$300 billion during the subscription.
"Overseas investors think highly of ICBC shares because the lender has the
biggest customer network among Chinese banks," said Daniel Zeng, chief
investment officer with First State Cinda Fund Management, adding that investors
are betting on China's sizzling economic growth.
Bank of China, the country's second-biggest lender which raised about US$11.2
billion for its IPO in May, attracted around US$121 billion in demand from
institutional investors; and individual investors in Hong Kong ordered about
US$38 billion.
Shares in China Construction Bank, the country's third-largest lender, have
risen 54 per cent since its US$9.2 billion global share sale last year.
