The Industrial and Commercial Bank of China (ICBC) raised US$19 billion in the world's largest initial public offering (IPO) after it priced the Hong Kong portion at the top end of an indicated range on Friday, boosted by overwhelming demand from investors.

Beijing-based ICBC priced its Hong Kong offering at HK$3.07 a share, the top end of an indicative range between HK$2.56 and HK$3.07. At that price, the bank will raise US$13.9 billion from the H-share market.

Meanwhile, the Shanghai portion of the IPO, the first to be launched simultaneously with a Hong Kong offer, sold 13 billion A shares and was priced at 3.11 yuan (US$38.9 cents), near the top of its proposed range of 2.6 yuan (US$32 cents) to 3.12 yuan (US$39 cents). The mainland portion will raise US$5.1 billion.

Analysts and banking industry watchers expect a strong trading debut and are optimistic about the ICBC's performance.

"In view of other mainland lenders' solid trading debuts, I think shares in the ICBC will jump by 20 per cent on its first trading day (next Friday)," said Marco Mak, head of research at Hong Kong-based Taifook Securities.

"Hong Kong investors have shown a strong interest in the mainland's banking shares ever since Bank of Communications' public offering in Hong Kong last year. With the ICBC's strong liquidity in the Hong Kong stock market and recent favorable market sentiment, the debut will be pretty good," Mak told China Daily.

May Yan, vice-president and senior analyst at Moody's Asia-Pacific branch, who specializes in the mainland's banking industry, said investors' enthusiasm was fuelled by the Chinese Government's effort and determination to reform the financial institutions.

"Investors have been keen to invest in banks on the mainland, betting that strong support from the central government will limit risks while allowing them to tap the booming economy," said Yan.

The shares are due to begin trading simultaneously in Hong Kong and Shanghai next Friday.

The ICBC's massive share sale surpasses the previous record set by Japan's NTT Mobile Communications Network, which raised US$18.38 billion in what was then the biggest IPO in the world.

The ICBC's mega deal values the largest lender of the "big four" State-owned commercial banks at US$129 billion in terms of market capitalization, ranking it seventh among banks in the world.

The mainland's second-largest bank and foreign exchange specialist, Bank of China, ranks tenth with US$109 billion in assets.

The ICBC is the fifth mainland bank to float shares in Hong Kong. Investors have rushed for shares in all five Hong Kong IPOs by the mainland banks since last year on the back of banking industry success driven by the rapidly growing economy.

The Hong Kong portion of the ICBC listing has drawn the largest amount of orders ever from retail investors more than US$53.9 billion. Over 1 million people, accounting for one in seven of Hong Kong's total population, placed orders.

The overwhelming demand overtook the record set by Bank of China, whose IPO in June attracted HK$280 billion (US$36.4 billion) in retail orders.

(China Daily October 21, 2006)