CMB goes for Hong Kong listing
By Zhang Ran (China Daily)
Updated: 2006-06-08 09:02
Shanghai-listed China Merchants Bank (CMB), the nation's No 6 lender, has
applied to the Hong Kong bourse to float H shares worth at least US$2.2
billion.
Li Yinquan, vice-president of China Merchants Group, a
major shareholder with a 25.5 per cent stake in the bank, yesterday told China
Daily that the bank filed with the Hong Kong stock exchange to issue H shares on
Tuesday.
"The bank will issue at least 15 per cent of its total equity,
but we have not decided the exact amount." Li said.
The Shenzhen-based
bank said in a statement in March that it planned to offer US$2.2 billion new
shares in Hong Kong.
China International Capital Corp, UBS and JP Morgan
will be the bank's joint underwriters, according to Li.
Li said it would
take six to eight weeks for the Hong Kong exchange to make a decision. Sources
close to the bank said that if approved, the deal would go to market in late
August or early September.
Domestic shares, or A shares, accounted for
about 38 per cent of the bank's total equity before the proposed Hong Kong
listing.
The CMB now trades at 2.73 times its net asset value (NAV) of
2.64 yuan (32 US cents) per share as of the end of March. Assuming the lender
raises US$2 billion in the Hong Kong offering, its NAV will increase to 3.34
yuan (41 US cents) per share.
By comparison, Bank of Communications and
China Construction Bank are trading at 2.55 and 2.52 times their forecast 2006
NAV, respectively.
The CMB posted a net profit of 1.313 billion yuan
(US$160 million) in the first quarter, up 24 per cent year on year.
It
was rated one of the best performers in 2005 by domestic magazine the Banker,
which is affiliated to the Chinese Academy of Social Sciences.
Its
non-performing loan ratio stood at 2.37 per cent at the end of March.
The
CMB's proposed H-share issue comes at a time when many investors are in favour
of Chinese financial stocks, with Bank of China rising 34 per cent after raising
US$9.8 billion in the world's largest initial public offering (IPO) in six years
last month.
Bank of China yesterday announced it would add HK$11 billion
(US$1.4 billion) worth of new H shares as part of an over-allotment option, as
expected, making it the world's fourth-largest IPO.
It said in a
statement it would issue an additional 3.84 billion new H shares at HK$2.95 each
to cover over-allocations of shares to institutional investors in its Hong Kong
IPO.
The bank raised US$9.7 billion in the world's sixth-largest initial
public offering prior to issuing additional shares.
Shares in the Chinese
lender have soared about 21 per cent since its Hong Kong debut last week to end
at HK$3.525 (45 US cents) yesterday.
The share sale was the largest from
China and marked another milestone in the government's efforts to clean up a
banking sector that has long been a weak link in the country's booming economy
as a result of decades of State-directed lending.
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