2nd UPDATE: Agricultural Bank Of China Applies For Hong Kong,Shanghai IPOs
May 04 2010 - 10:57AM
Dow Jones News
Agricultural Bank of China Ltd., the last of China's big four
state-run lenders to be listed, has filed its listing application
with the Hong Kong stock exchange and Chinese securities regulators
Tuesday, officially kicking off a process for its US$20 billion to
US$30 billion dual listing in Shanghai and Hong Kong, people
familiar with the situation said.
Agricultural Bank's IPO could be the world's largest ever,
exceeding Industrial & Commercial Bank of China Ltd.'s (IDCBY)
US$22 billion stock offering in 2006 or Visa Inc.'s (V) $19.7
billion IPO in 2008, data provider Dealogic said.
The rural lender aims to list on both the Shanghai and Hong Kong
bourses in July, another person said. Failing that, Agricultural
Bank will try to list on both exchanges simultaneously in
September, he added.
The person added that the Chinese authorities seem determined to
push ahead with the listing of Agricultural Bank before they allow
the country's major banks to recapitalize their balance sheets.
ICBC, Bank of China Ltd. (BACHY), China Construction Bank Ltd.
(CICHY) and Bank of Communications Ltd. (BCMXY) have all announced
plans to tap the bond and equities markets in Shanghai and Hong
Kong for a total US$46.5 billion this year after last year's
massive lending binge -the key platform of China's stimulus
spending - depleted their capital buffers.
Agricultural Bank declined to confirm whether it has submitted
its listing application, but said it would be seeking to float its
shares in Shanghai and Hong Kong at an "appropriate time in the
third quarter."
Another person familiar with the situation said the A- and
H-share tranches could be of equal size, going against current
practice where the A-share portion is larger. The money raised from
the A-share tranches of the IPOs of both Metallurgical Corp. of
China Ltd. (MLLUY, 1618.HK, 601618.SH) and China Railway
Construction Corp. Ltd. (1186.HK) were each about 20% larger than
the proceeds from the H-share tranche, while China South Locomotive
& Rolling Stock Corp. Ltd.'s (1766.HK, 601766.SH) A-share
proceeds were almost double, Dealogic said.
Metallurgical Corp of China raised a total of US$5.13 billion in
its IPO in 2009; China Railway Construction raised US$5.71 billion
in March 2008, and China South Locomotive raised US$1.57 billion in
August 2008.
Agricultural Bank is in the process of meeting potential
investors in its IPO and is targeting sovereign wealth funds, Hong
Kong tycoons and peers in the banking and agricultural sector as
cornerstone investors, the second person said, adding there is
strong interest from the Middle East.
China's National Business Daily reported in April that
Agricultural Bank had decided to introduce the nation's pension
fund, which will invest at least CNY15 billion, to be the sole
strategic investor ahead of its IPO. That's after another
publication, the 21st Century Business Herald, said last July that
French bank Credit Agricole SA (CRARY) and U.S. bank Wells Fargo
& Co. (WFC) had dropped out of talks to be strategic investors
in Agricultural Bank's IPO because both were severely hit by the
global financial crisis.
Analysts said there is no lack of interest for Agricultural
Bank's shares, especially from within China. China Life Insurance
Co. (LFC), the country's largest life insurer by premiums, said
publicly earlier this year it intends to subscribe to the rural
bank's IPO.
While Agricultural Bank's listing had been widely expected for
years, the bank surprised many when it began sending invitations to
banks in April to underwrite its IPO.
Investors have been awaiting Agricultural Bank's IPO since
ICBC's float, which came after the IPOs of China's two other Big
Four lenders, Bank of China Ltd. and China Construction Bank
Corp.
The global financial crisis pushed Agricultural Bank's IPO plans
onto the back burner, but more recently China's drive to ensure
that rural areas have proper access to finance seemed to further
threaten Agricultural Bank's plans to list shares as it tried to
shore up its roots as a rural lender.
Bankers said Agricultural Bank is trying to seize the liquidity
left idle in the region after American International Group Inc.
(AIG) canceled the planned US$10 billion to US$20 billion Hong Kong
IPO of its Asian life insurance unit and announced in March it
would sell it to Prudential PLC instead.
Agricultural Bank in April announced a group of 10 investment
banks to underwrite the deal, among which China International
Capital Corp. will handle both the A- and H-share portions.
Citic Securities Co. (600030.SH), Guotai Junan Securities Co.
and China Galaxy Securities Co. are the other underwriters for its
A-share offering in China, while Goldman Sachs Group Inc. (GS),
JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), Deutsche Bank
AG (DB) and Macquarie Group Ltd. (MQBKY) are the other underwriters
for its H-share offering in Hong Kong, according to the
statement.
Agricultural Bank's wholly owned investment banking unit, ABC
International Holdings Ltd., will also participate in underwriting
work for the lender's Hong Kong IPO.Agricultural Bank's mega IPO
will seal China's position as the top issuer of new shares this
year, with US$24.8 billion raised in 146 new share offerings so far
this year, ahead of Japan which has raised US$11.5 billion, mainly
from one deal: the US$11 billion IPO of Daiichi Life Insurance Co.
About 90% of the funds raised by Chinese companies this year have
been via domestic offerings in China, while about 7% were raised in
Hong Kong.
-By Amy Or and Wynne Wang, Dow Jones Newswires
(Victoria Ruan in Beijing contributed to the article.)
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