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Tue, Oct 24, 2006 - Page 10 News List

ICBC offering set to rake in US$22 bn

HANDSOME RETURN The price of the bank's Hong Kong H-shares were set at the high-end of the range, guaranteeing a swift return for the thousands who snapped up shares


Industrial and Commercial Bank of China (ICBC, 中國工商銀行) is set to reap a record US$22 billion bonanza after pricing its much anticipated float at the top end of the indicative range yesterday.

In a posting with the Hong Kong Stock Exchange, China's largest lender said it had set the price of its Hong Kong H-share initial public offering (IPO) at HK$3.07 (US$0.39), compared with an indicated range of HK$2.56-HK$3.07.

Its A-shares offered in the Shanghai portion will go for 3.12 yuan (US$0.39), again at the limit of the IPO range of 2.60 yuan-3.12 yuan, it said in a mainland regulatory filing.

ICBC is selling 35.4 billion H-shares in Hong Kong and 13 billion A-shares in Shanghai for its dual listing on Friday.

In the Chinese statement lodged with the Hong Kong exchange, the bank said that due to huge public demand, ICBC had exercised its right to increase the Shanghai offer to 14.95 billion A-shares, the first Chinese company to do that on the mainland bourse.

The state-owned bank said it has attracted a total of 781 billion yuan in orders from mainland-based investors.

Twenty-three domestic institutional investors, including China's top insurers China Life Insurance (中國人壽保險) and Ping An Life Insurance (平安保險), had subscribed to 18 billion yuan worth of shares.

There was no immediate confirmation that it had exercised a similar over-allotment right to increase the Hong Kong issue to 40.7 billion H-shares, but a market source said the bank has plans to do so.

At US$22 billion, the listing would be the largest ever, beating the US$18.4 billion float of Japanese mobile phone operator NTT DoCoMo in 1998.

With analysts predicting a gain of 10 percent to15 percent in Hong Kong and 10 percent to 20 percent in Shanghai over the IPO price on the first day, small investors are expected to clean up straight away.

"This offering is almost assured to make a few hundred bucks for the taxi drivers and housewives -- they will want to get their profit on the first day," Fulbright Securities analyst Francis Lun told local RTHK radio.

ICBC is the third of China's big four banks to list offshore after China Construction Bank (中國建設銀行), which came to market last year and Bank of China (中國銀行), which sold shares in Hong Kong in June and then in July in Shanghai to raise nearly US$14 billion.

It has drawn huge interest both at home and abroad because of China's sizzling economic growth and the overhaul and opening up of its banking sector.

Prior to the public offer, big-spending investors took their stakes, including government investment institutions from Kuwait, Qatar and Singapore alongside China's top insurers and Hong Kong tycoons such as Asia's richest man Li Ka-shing (李嘉誠).

Despite being priced at the top end of the range, ICBC shares should still do well given the current investment fever for all things Chinese and the fact that the recent mainland offerings have all done well here, analysts said.

Investors hope China's banking reforms will be able to clean up the hundreds of billions of dollars of bad debt accumulated in the days when commercial gain took a back seat to communist ideology.

Beijing initiated reforms in 2003 and last year aimed at wiping out non-performing loans and preparing three of its big four state banks for foreign listing.

However, China's central bank yesterday warned non-performing loans remain a "huge and difficult" challenge.

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