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Bank may raise $5.7b in IPO

By Bei Hu (Bloomberg)
Updated: 2007-04-09 09:25

China CITIC Bank Corp may raise as much as $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.

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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 ($1.82 billion), the people said. The company may raise a further HK$30.17 billion ($3.86 billion) selling 4.89 billion shares in Hong Kong at HK$4.72 to HK$6.17, they said.

Mainland banks and insurers have sold $61.1 billion of shares in Hong Kong and Shanghai since June 2005, when Bank of Communications Co. 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."

At the upper end, Citic Bank's sale could be the world's largest stock sale so far this year, according to data compiled by Bloomberg. It could trump a $5.5 billion closed-end fund launch in the U.S. and a secondary share sale by Ping An Insurance (Group) Co., China's No. 2 insurer, which raised slightly more than $5 billion in February.

The price ranges value Citic Bank at 2.48 times to 2.81 times its estimated book value this year, according to the three people, who declined to be identified before an official statement. The price ranges have yet to be approved by the China Securities Regulatory Commission.

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 April 4.

China International Capital Corp., Citigroup Inc., Citic Securities Co., HSBC Holdings Plc and Lehman Brothers Holdings Inc. are arranging the sale. Ma Zhuangchun, a Beijing-based spokesman for CITIC Bank, and Tan Ning, board secretary of CITIC Securities in Beijing, could not be reached at the weekend. Spokesmen for the other investment banks declined to comment.