Money

China markets brace for AgBank IPO pricing

(Agencies)
Updated: 2010-07-06 15:33

WORLD'S BIGGEST?

The price range for the A-share offering is 2.52-2.68 yuan (37-40 cents) per share while the Hong Kong price range was narrowed to HK$3.18-HK$3.38 (41-43 cents) per share on Monday.

If AgBank's offering is priced toward the top of the indicated range, and a greenshoe option is exercised to expand the offering by 15 percent, the IPO could still become the world's biggest ever, exceeding Industrial & Commercial Bank of China's $21.9 billion offering in 2006.

That would value AgBank at about $150 billion, ranking it the fourth biggest bank in the world by market capitalisation behind ICBC, China Construction Bank and HSBC.

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AgBank is going public because it has finally been able to shed its massive non-performing loan book, which only a few years ago was around 25 percent.

AgBank's offering of a 15 percent stake will complete Beijing's plans to have its four major banks go public, and will allow AgBank to use the IPO proceeds to boost its capital cushion after most Chinese banks went on a lending spree during the financial crisis.

Founded in 1951 as the rural unit of the central bank, it aims to list its shares in Shanghai on July 15, and in Hong Kong the following day.

Roughly half of both the Shanghai and Hong Kong offerings have already been subscribed to by major cornerstone and strategic investors, including sovereign wealth funds, banks, insurers and other major companies. Retail demand for both IPOs so far showing a tepid response.

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 United States.