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Mon, Apr 09, 2007 - Page 10 News List

China Citic may seek to raise US$5.7b in IPO


China Citic Bank Corp (中國國際信託投資) may raise as much as US$5.7 billion in a simultaneous Hong Kong and Shanghai initial public offering, the world's largest stock sale so far this year, three people with knowledge of the details said.

The bank, based in Beijing, plans to offer 2.3 billion new shares in Shanghai at 4.66 yuan to 6.1 yuan to raise up to 14.03 billion yuan (US$1.82 billion), the people said. The company may raise a further HK$30.17 billion (US$3.86 billion) selling 4.89 billion shares in Hong Kong at HK$4.72 to HK$6.17, they said.

Chinese banks and insurers have sold US$61.1 billion of shares in Hong Kong and Shanghai since June 2005, when Bank of Communications Co (交通銀行) became the first domestic bank to go public in Hong Kong. They have been encouraged by high valuations as investors seek to benefit from China's rapid economic growth.

"This is not a bargain price" for stock in China's eighth-largest bank by assets, said Wu Xuan, a Shenzhen-based analyst at Penghua Fund Management Co.

It "leaves little room for future upside gains if it's priced at the top end," Wu said.

Citic Bank's sale -- if priced at the uppper end -- could be the world's largest stock sale so far this year, according to data compiled by Bloomberg.

It could trump a US$5.5 billion closed-end fund launch in the US and a secondary share sale by Ping An Insurance Co (平安保險), China's No. 2 insurer, which raised slightly more than US$5 billion in February.

The new shares to be listed in Shanghai represent a 6 percent stake in the bank, while those in Hong Kong are equivalent to 12.8 percent. The stock may start trading on April 27, Citic Bank said in a statement on Wednesday.

The bank was China's seventh-largest by total assets at the end of 2005, according to a preliminary share sale document posted on the Web site of Hong Kong Exchanges and Clearing Ltd. It fell to eighth last month after the Postal Savings Bank of China was established.

Profit at Citic Bank this year was expected to gain 53 percent to 5.69 billion yuan, according to an April 4 statement.

Citic Bank had 453.4 billion yuan of loans outstanding and 618.4 billion yuan of deposits as of Dec. 31, according to the prospectus for the share sale. The bad-loan ratio was 2.5 percent at the end of last year. The capital-adequacy ratio stood at 9.41 percent, above the regulatory requirement of 8 percent.

Citic Bank is controlled by Citic Group, China's biggest state-run investment company.

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