Bank of China (BOC) could become the first company to launch an initial
public offering (IPO) on the domestic bourse's main board by issuing around 20
billion yuan (US$2.5 billion) of A shares in June.
Investors put
application forms into the collection box for the initial public offering
of Bank of China before the deadline in Hong Kong May 23, 2006. Bank of
China is expected to price its IPO, worth up to $9.8 billion, at or near
the top of its indicated range, but turbulent global markets could have
curbed retail oversubscription levels.
[Reuters] |
Wang Zhaowen, a spokesman for BOC, yesterday confirmed the bank will issue A
shares very soon. But he did not give a timetable.
However, domestic business newspapers yesterday reported that the bank will
likely be listed in June on the Shanghai Stock Exchange.
"The bank will probably become the first IPO on the domestic bourse's main
board," China Business News said yesterday, quoting an investment banker who
participated in the bank's listing issues.
The Shanghai-based Guotai Jun'an Securities, the Beijing-based CITIC
Securities and Galaxy Securities have been hired as underwriters, a Guotai
Jun'an staff member close to the deal told China Daily.
Speculation about the timing of the share issuance is based on fact, he
indicated.
"As the Chinese saying goes, there are no waves without wind," he said,
declining to be named.
"When to issue A shares depends on the performance of the A share market,"
BOC Spokesman Wang responded, adding that the bank will keep a close watch on
the market and then decide when is the right time to act.
"It also depends on the trading of BOC's H shares in Hong Kong," Wang said.
According to Wang, BOC has already got the go-ahead from the relevant
authorities including the China Securities Regulatory Commission (CSRC) to issue
A shares.
"In fact, issuing A shares on the domestic bourse is part of BOC's whole
listing plan and we have already got approval from the CSRC. But there are still
some details that need the CSRC's approval."
Wang said the total volume of A shares and H shares together will account for
15 per cent of BOC's total equity.
The bank has already issued US$9.8 billion of H shares.
"The number of A shares will not be more than 10 billion, capping
approximately 20 billion yuan (US$2.5 billion)," Xiao Gang, chairman of BOC said
last week in Hong Kong. If so, A shares will account for 3 per cent of the
bank's equity.
The government's recent lift of the year-long ban on IPOs in the domestic
bourse has encouraged many banks who need cash to issue A shares to increase
their capital-adequacy ratio, a key factor when evaluating a bank's competence.
Last week, the Fujian-based Industrial Bank also announced it would issue A
shares very soon and probably be one of the first banks to do so.
According to Li Renjie, president of the Industrial Bank, it passed IPO
application materials to the CSRC at the end of last year.
Analysts pointed out that A-share issuance could turn out to be a
double-edged sword for bank shares in the domestic market.
"The issuance of H shares is likely to benefit BOC's A share price as the H
share price, which is higher, would be taken by investors as a reference point,"
said Li Minya, an analyst with the Shenyin Wanguo Securities.
"But the stock of some other listed banks may be marginalized as
institutional investors would first of all pick BOC for their bank stock
portfolio," Li said.
BOC's A shares will be available to mainland investors and overseas buyers
although the latter will only be permitted under a qualified foreign
institutional investor (QFII) scheme, the bank said in its preliminary listing
document.
(China Daily 05/30/2006 page9)
