AgBank nets US$19 bln in IPO
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Agricultural Bank of China Ltd raised at least US$19.2 billion in its initial public offering, which is likely to become the world's biggest IPO, according to its pricing data.
AgBank can increase the size of its IPO to as much as US$22.1 billion if it turns to the so-called green-shoe, or over-allotment, option to expand the sale after listing. The bank could surpass the Industrial and Commercial Bank of China, which netted US$21.9 billion in October 2006, as the world's largest IPO.
The Beijing-based bank is selling 22.2 billion shares in Shanghai at 2.68 yuan (40 US cents) each, the top of its range from 2.52 yuan, it said in a filing to the Shanghai Stock Exchange yesterday. The shares were 11 times oversubscribed by institutional and retail investors in Shanghai.
China's largest lender by customers priced its Hong Kong shares at HK$3.20 (41 US cents) each - the middle of its offer price range of HK$2.88 to HK$3.48. The bank sold 25.4 billion shares in Hong Kong.
"It's a realistic pricing as the A-share price was lower than previous expectations of more than 3 yuan apiece," said Hua Meiyu, an asset manager at a major insurer in Shanghai.
Hua's view is shared by Cai Junyi, a Shanghai Securities analyst, who said the pricing is the best option under the current market sentiment. Some analysts said the lower pricing is set to propel the shares to jump significantly on their debut trading scheduled on July 15 in Shanghai .
The bank sold 40 percent of the IPO to cornerstone, or strategic, investors. About 40.3 percent of the shares were offered to retail investors, with the remaining 19.7 percent to institutional investors.
The bank's huge IPO came at a time when the Shanghai Composite Index has lost almost a quarter this year to rank as the worst performer among the world's 10 biggest stock markets. The IPO also coincided with a capital-raising spree by domestic rivals eager to replenish capital after they extended a record 9.6 trillion yuan in loans in 2009.
AgBank's four largest rivals - ICBC, China Construction Bank, the Bank of China and the Bank of Communications - have announced plans to raise up to US$34.4 billion by selling bonds and shares. Smaller bankers such as China Merchants Bank also have plans to raise capital.
China International Capital Corp, Citic Securities, China Galaxy Securities and Guotai Jun'an Securities are managing AgBank's yuan-denominated A-share offering.
CICC, Deutsche Bank, Goldman Sachs, JPMorgan Chase & Co, Macquarie Group and Morgan Stanley were hired to arrange the Hong Kong portion of the IPO.
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