China’s Agricultural Bank (農業銀行) yesterday received the long- awaited green light from securities regulators to launch what could become the world’s biggest initial public offering (IPO).
The bank, the last of China’s “big four” state lenders to float shares, is seeking to sell 22.235 billion yuan-denominated A shares, or 7 percent of its enlarged share capital, in Shanghai, according to a preliminary prospectus released on Friday last week.
It also plans to issue 25.412 billion H shares, or 8 percent of its enlarged share capital, in Hong Kong.
China’s securities regulator announced its decision yesterday after reviewing the proposed IPO.
The approval came amid speculation that the size of the bank’s IPO may be much smaller than earlier anticipated due to weak market sentiment and concerns over the profitability of its operations, which focus on rural lending.
The bank was initially expected to raise as much as US$30 billion, which would make it the world’s biggest IPO since the US$22 billion offering of the Industrial and Commercial Bank of China (ICBC, 中國工商銀行) in 2006.
The Hong Kong stock exchange will review the bank’s Hong Kong part of the dual listing today, Dow Jones Newswires reported earlier, citing people familiar with the deal.
Chinese banks are rushing to raise tens of billions of dollars from the stock market after being ordered by regulators to strengthen their balance sheets following a government-backed lending spree last year to boost growth.
Several other listed banks, including the top three — Bank of China (中國銀行), China Construction Bank (中國建設銀行) and ICBC — are also seeking to raise tens of billions of dollars between them.
Earlier this week Bank of Communications (交通銀行), 19 percent owned by HSBC, cut a planned rights issue in Shanghai and Hong Kong by a fifth to 33.1 billion yuan.
Agricultural Bank is widely considered to be the weakest of the major state banks, while its rural lending focus and burden of loans issued to further government policy leave it less equipped to hit stricter capital requirements.
“Generally, the biggest concern in Agbank is its assets quality,” analysts led by Hu Yuanchuan at China’s Industrial Securities said in a research note this week.
The Chinese brokerage expects the bank to raise between 120 billion and 160 billion yuan from the IPO. Agricultural Bank chose Goldman Sachs Group Inc, JP Morgan Chase & Co, Macquarie Group Ltd, China International Capital Corp and Deutsche Bank AG to run its IPO in Hong Kong. CICC and three other Chinese brokerages were chosen to advise on its share sales in China.
The Ministry of the Interior (MOI) is to tighten rules for candidates running for public office, requiring them to declare that they do not hold a Chinese household registration or passport, and that they possess no other foreign citizenship. The requirement was set out in a draft amendment to the Enforcement Rules of the Public Officials Election and Recall Act (公職人員選舉罷免法 ) released by the ministry on Thursday. Under the proposal, candidates would need to make the declaration when submitting their registration forms, which would be published in the official election bulletin. The move follows the removal of several elected officials who were
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