ICBC Raises $19B In World's Biggest IPO

CBS5 ^ | Oct 20, 2006

[nickcarraway]

China's biggest bank, Industrial & Commercial Bank of China, raised $19 billion Friday in the world's biggest initial public offering, pricing its IPO at the top end of expectations, thanks to overwhelming demand.

The stock sale, the first ever for shares to list in both Hong Kong and Shanghai, surpasses the previous record, a $18.4 billion IPO by Japanese mobile phone company NTT DoCoMo Inc. in 1998.

The state-owned bank, called ICBC, priced its Hong Kong offering at 3.07 Hong Kong dollars a share, at the top end of the indicative price range of HK$2.56-HK$3.07 ($0.33-$0.39), Dow Jones Newswires reported, citing an unidentified person familiar with the deal.

At that price, the bank is raising $13.9 billion from the Hong Kong offering.

The Shanghai portion of the offering was priced at 3.11 yuan ($0.39) — near the top of its price range of 2.60 yuan to 3.12 yuan ($0.33-$0.39), Dow Jones Newswires said. The mainland portion will raise $5.1 billion.

If the so-called greenshoe option is exercised and the bank decides to increase its offering, the entire IPO could grow to $22 billion.

ICBC will officially announce share pricing Monday.

The shares are due to begin trading simultaneously in Hong Kong and Shanghai next Friday, Oct. 27.

The greenshoe option will enable the bank to sell up to 14.95 billion A shares and 40.70 billion H shares, which would account for 16.7 percent of its total share capital.

Mainland Chinese banks have a long track record of bad debts and lending scandals, but investors have been keen to buy shares, betting that government support will limit risks while allowing them to tap into China's economic boom.

Like the two other major state banks that have already sold shares in Hong Kong, Bank of China and China Construction Bank, ICBC has restructured and wiped out billions of dollars in bad debts.

ICBC's Hong Kong offering has attracted the largest amount of orders ever from retail investors, drawing orders of more than HK$420 billion ($53.9 billion), The Standard newspaper and the Hong Kong Economic Journal said.

More than 1 million people — or one in seven of Hong Kong's total population — placed those orders, the Journal said.

The keen demand surpassed the record set by Bank of China, the mainland's No. 2 lender, whose IPO in June drew HK$280 billion in retail orders.

Meanwhile, the institutional book for the Hong Kong offering was more than 30 times covered, attracting around $325 billion in orders from investors, Dow Jones quoted another person familiar with the deal as saying.

[Proud_USA_Republican]

"The state-owned bank...."

More faux-capitalism. I wouldn't touch this stock with a ten foot chopstick.

[kinoxi]

I don't know too much about shareholders rights in the chicom sphere of economics. Do they actually have a say? Or are their rights contingent upon approval by state censors like most other opinions are?

[Dark Skies]

I am certainly unsure where this might lead. But if this bank wants to attract international investors (what company doesn't), it will have to play by international (read "capitalist") rules and provide the same openness do businesses in non-communist countries.

As amazing as it seems, capitalism may defeat communism in a frontal assault.

I would imagine that inside China there is already a massive struggle between the business sector and the military/commie party sector.

[kinoxi]

I don't see the chicoms giving up their bank. It will be interesting to see how this turns out. Are you aware of any way to find out who the initial investors in the IPO are? Just curious, might make future actions on an international scale a little more predictable.

[Fiddlstix]

More faux-capitalism. I wouldn't touch this stock with a ten foot chopstick.

I'm with you.