Minsheng Banking plans $3b share sale
Updated: 2009-06-19 06:32
(HK Edition)
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HONG KONG: China Minsheng Banking Corp., the nation's first privately owned lender, may raise as much as $3 billion in a first-time Hong Kong share sale as soon as the end of the year, four people familiar with the matter said.
UBS AG, Switzerland's biggest bank by assets, will help manage the share sale, the people said, asking not be identified because the talks are confidential. The Chinese bank may start offering the shares as early as November, one of the people said.
A capital shortage at Minsheng threatens to crimp profit growth amid a government-backed lending boom aimed at boosting expansion in the world's third-largest economy. The bank, founded by 59 private investors including pig-feed tycoon Liu Yonghao, aims to increase profit by 35 percent this year after growth slowed to 25 percent in 2008, the slowest pace since its 2000 listing in Shanghai.
"The Hong Kong sale will ease Minsheng's capital constraint and boost its brand awareness overseas," said May Yan, a Hong Kong-based analyst at Nomura International HK Ltd. "If the timing of the share sale is right, Minsheng may catch up with a new wave of upgrading of China banks as the economy recovers and their margins improve."
Beijing-based Minsheng said on June 5 it is reviving a plan to sell shares in Hong Kong to replenish capital depleted by loan expansion and acquisitions. The company said it plans to sell as much as 15 percent of its enlarged share capital and may increase the offering by 15 percent if there's enough demand.
Li Limin, a Beijing-based press officer at Minsheng, declined to comment, as did Chris Cockerill, a Hong Kong-based spokesman at UBS.
The ninth-largest bank listed on the mainland delayed the Hong Kong initial public offering for a second time in June 2005, citing market conditions. The plan was first delayed in February 2004 after Minsheng said it faked a document showing a shareholder meeting had approved a change in the company's name.
Shareholders will vote on the new plan on June 22. The sale is also subject to approval from China's banking and securities regulators as well as the Hong Kong stock exchange.
Minsheng may sell the Hong Kong shares for at least HK$8 each, and investment banks including UBS may agree to underwrite the offer at that price, two people familiar with the matter said. Deutsche Bank AG, Morgan Stanley, Bank of America Corp and Macquarie Group Ltd are also among banks vying for an underwriting role, the people said.
Minsheng stock has gained 94 percent in Shanghai this year, compared with a 54 percent increase in the benchmark Shanghai Composite Index. The shares have gained 8.8 percent since it announced the share sale plan two weeks ago.
Minsheng's capital adequacy ratio narrowed to 9.22 percent at the end of December, lower than the 10 percent minimum required by China's regulator and the 13.4 percent average at the nation's 14 publicly traded banks.
Bloomberg News
(HK Edition 06/19/2009 page3)