- Title: CHINA: AgBank prices IPO to be world's largest
- Date: 8th July 2010
- Summary: BEIJING, CHINA (JULY 7, 2010) (REUTERS) PEOPLE WALKING PAST EXTERIOR OF AGRICULTURAL BANK OF CHINA BRANCH INTERIOR OF BANK VARIOUS OF BANK TELLER WORKING VARIOUS OF CUSTOMER COUNTING MONEY SHARES AND CURRENCY RATES DISPLAYED ON COMPUTER SCREEN PEOPLE USING ATM MACHINES ATM MACHINE SCREEN DISPLAY ON ATM CUSTOMERS QUEUING AT ATM MACHINE HONG KONG, CHINA (JULY 7, 2010) (REUTERS) EXTERIOR OF SECURITIES COMPANY STOCK PRICES ON COMPUTER SCREEN WOMAN WATCHING SCREEN VARIOUS OF PRIVATE INVESTORS CHECKING STOCKS ON COMPUTERS (SOUNDBITE) (English) ASIA EQUITY STRATEGIST FOR GLOBAL MARKETS AT SOCIETE GENERALE, TODD MARTIN, SAYING: "It's actually going to perform relatively OK. I see anywhere from five percent upside in the next, up to a month and I think where it was priced was in the top one-third of its range. It is at a 20 to 30 percent discount to larger banks, which I think gives it a comfortable cushion for a little bit of upside in the after-market." VARIOUS OF PRIVATE INVESTOR MR SIN CHECKING HIS STOCKS AT COMPUTER (SOUNDBITE) (Cantonese) PRIVATE INVESTOR MR SIN SAYING: "I do not really know much about the bank. The stock market has been fluctuating a lot lately and it is not ideal, so I am not going to buy it this time." SHANGHAI, CHINA (JULY 7, 2010) (REUTERS) STOCK INVESTORS AT FLOOR OF SECURITIES FIRM STOCK INVESTORS LOOKING ON ELECTRONIC BOARD SHOWING STOCK PRICES (SOUNDBITE) (Mandarin) STOCK INVESTOR, MR. SHEN, SAYING: "Overall, banks are not doing well. The bank stocks that I have bought are not rising in value, and now I am stuck with them. So why should I be buying into that (Agriculture Bank of China) IPO?" ELECTRONIC BOARD SHOWING STOCK PRICES STOCK INVESTORS LOOKING ON STOCK INVESTORS AT SECURITIES FIRM (SOUNDBITE) (Mandarin) STOCK INVESTOR, MR. CHEN, SAYING: "Of course the price is cheap but the overall market is not doing well. The trend is not good, and the overall market is bad, so we are just looking at this in a general way." EXTERIOR OF SHANGHAI STOCK EXCHANGE CHINESE NATIONAL FLAG AND SHANGHAI STOCK EXCHANGE FLAG
- Embargoed: 23rd July 2010 13:00
- Keywords:
- Location: China
- Country: China
- Topics: Finance
- Reuters ID: LVA6I83V5108MO1VWQIVZMO3L585
- Story Text: The Agricultural Bank (AgBank) of China promised a deal that would break all IPO records when it priced its Hong Kong and Shanghai dual listing on Tuesday (July 6), with plans to raise more than $22 billion U.S. dollar when adding in over-allotment shares.
The initial public offering (IPO), which is raising funds to replenish capital, still faces a tough after-market.
China's third largest bank by assets, AgBank has survived a plunging Chinese stock market and a euro zone debt crisis that has shaken other markets across the globe, and it was still able to pull in a strong demand for the IPO.
AgBank is set to raise a total of $19.3 billion, but a greenshoe over-allotment of shares would expand the proceeds to $22.2 billion.
A source with direct knowledge of the listing told Reuters that AgBank's Shanghai offering was about 20 times oversubscribed by institutional investors and analysts said investor demand appeared robust.
"It's actually going to perform relatively OK. I see anywhere from five percent upside in the next, up to a month and I think where it was priced was in the top one-third of its range. It is at a 20 to 30 percent discount to larger banks, which I think gives it a comfortable cushion for a little bit of upside in the after-market," said Todd Martin, Asia equity strategist for global markets at Societe Generale.
Beijing-based AgBank sold 25.4 billion shares in Hong Kong at HK$3.20 ($0.41 U.S. dollar) each, compared with a recently narrowed range of HK$3.18 to HK$3.38, sources directly involved in the deal said on Tuesday.
But the mood among private investors was still wary on Wednesday (July 7), ahead of the debut planned for July 15 in Shanghai and a day later in Hong Kong.
"I do not really know much about the bank. The stock market has been fluctuating a lot lately and it is not ideal, so I am not going to buy it this time," said Hong Kong-based private investor Mr Sin (pron: sin).
Private investors in Shanghai shared his views.
"Overall, banks are not doing well. The bank stocks that I have bought are not rising in value, and now I am stuck with them. So why should I be buying into that (Agriculture Bank of China) IPO?" said Shanghai stock investor Mr Shen.
"Of course the price is cheap but the overall market is not doing well. The trend is not good, and the overall market is bad, so we are just looking at this in a general way," said investor Mr Chen.
Agbank, the last of China's big banking institutions to go public, has a sprawling network of branches in China's rural parts but also a presence in its major cities as well.
The success of the IPO appears to have encouraged further fund raising efforts by Chinese banks. Industrial & Commercial Bank of China previously held the IPO world record with its US$21.9 billion offering in 2006. ICBC is now considering raising $6.6 billion in its own rights issue, just five days after Bank of China announced an $8.8 billion rights offer.
Only three years ago, AgBank, founded by Mao Zedong in 1951, was technically insolvent, with non-performing loans of around 24 percent.
Its turnaround, after a $30 billion bailout and bad loan carve-out, underscores the strength of China's rapidly expanding economy and the state's tight grip on the banking industry.
Headed by Chairman Xiang Junbo, an award-winning scriptwriter and war hero, AgBank has 24,000 branches, 441,000 employees and 320 million customers -- more than the population of the U.S. - Copyright Holder: REUTERS
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