China Everbright Bank (光大銀行) soared on its Shanghai stock market debut yesterday in China’s second-largest initial public offering (IPO) of the year after Agricultural Bank of China’s (AgBank, 中國農業銀行) record-breaking effort.
The lender — which has raised 18.9 billion yuan (US$2.78 billion) by selling 6.1 billion shares at 3.1 yuan per share — closed the session 18.1 percent higher at 3.66 yuan.
The benchmark Shanghai Composite Index ended down 0.21 percent yesterday at 2,666.30 points.
If over-allotment options are exercised, Everbright could increase the offering to 7 billion shares and raise 21.7 billion yuan.
“The performance is a bit stronger than market expectation. Its IPO price is attractive given the valuation of the most comparable peer China CITIC Bank (中國中信銀行),” said Tang Yayun, a Shanghai-based banking analyst at Northeast Securities.
Everbright said late on Tuesday that its first-half net profit almost doubled from a year earlier to 6.83 billion yuan on a higher net interest margin.
Everbright is the latest Chinese bank to raise money from investors after the government ordered lenders to increase their capital reserves amid fears of an explosion in bad debts, following record lending last year.
AgBank, the last of the “Big Four” state banks to go public, said last week it raised a total of US$22.1 billion in the world’s largest IPO — a dual listing in Shanghai and Hong Kong.
Large fundraising plans by banks have been blamed for weighing down the Chinese share market this year. The market has been one of Asia’s worst performers, dropping about 18 percent so far this year.
Tang said Everbright’s strong debut was a good sign for other banks planning to list shares or raise money on the domestic stock market.
Guangdong Development Bank (廣東發展銀行), in which Citigroup has a 20 percent stake, said earlier this year it hoped to launch an IPO to help finance its rapid expansion over the next few years.
Industrial and Commercial Bank of China (中國工商銀行) said last month it planned to raise up to 45 billion yuan via a rights issue in Shanghai and Hong Kong.
Rival Bank of China (中國銀行) said previously it wanted to raise up to 60 billion yuan via a rights issue in Shanghai and Hong Kong, while China Construction Bank (中國建設銀行) has announced a 75 billion yuan rights issue.
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