Banking

AgBank signs deal with 7 investors

(Asia News Network/The Star)
Updated: 2010-06-19 10:56

HONG KONG - Agricultural Bank of China (AgBank) has reached an agreement with a group of seven investors ahead of its massive initial public offering, sources say, with two funds from the Middle East considering a stake that may exceed $2 billion.

The agreements are a key step for the State-owned lender, as the more money it can collar before the Shanghai-Hong Kong listing, the easier it will be to raise its record-setting goal.

But there were plenty of headwinds facing the deal, another reminder appearing yesterday in a report that Industrial and Commercial Bank of China might delay its fund-raising until 2011 on concerns about the large drop in the country's stock market since mid-April.

With AgBank hoping to raise more than $23 billion, China's third-largest bank has signed up a diverse cornerstone investor list for its Hong Kong offering. The companies would appear in the Hong Kong offering prospectus due next week for what could be the world's largest ever IPO, the sources said.

China Life, Hong Kong tycoon Li Ka-shing, Kuwait's sovereign wealth fund, Rabobank, Standard Chartered, Temasek Holdings and Qatar's sovereign wealth fund have all committed to invest, although the exact amount of each stake has yet to be determined.

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Kuwait and Qatar were considering investments of $1 billion or more each, sources involved with the deal said, while other commitments ranged from $100 million to $500 million.

Britain's StanChart is considering a stake of up to $500 million, while Netherlands-based Rabobank is seeking up to $200 million.

The sources were not authorised to speak publicly about the IPO process. AgBank could not immediately be reached for comment.

Of the total amount AgBank hopes to raise, 53 percent will come from the Hong Kong listing, and the reminder from Shanghai. The formal list of cornerstone investors for the Shanghai A-share offering is not yet clear, though several Beijing-backed companies are expected to participate.