China Everbright Bank Co Ltd, said a Reuters report, will be launching its up to USD2.8 billion float on the Hong Kong bourse on Tuesday. The report said Everbright will be the third lender in the mainland to do so in Hong Kong.
Peers and banks Huishang Bank Corp Ltd and Bank of Chongqing are said to be building excess capital to buffer an anticipated rise in bad loans as China, the world's second-biggest economy, is said to be slowing down. All three had turned to Hong Kong in order to tap a wider pool of foreign investors, but the report said the news on bad loans had ward away potential investors. As a result, the banks resorted to signing up cornerstone investors, whom the latter acquired significant portions of the shares to be offered and agree to keep them for a minimum of six months.
Everbright received a total of USD1.74 billion in investment commitments from a total of 19 investors, which include China Shipping (Group) Co and Prudential Financial Inc, based on its prospectus that was released on Monday.
On Monday, the top 11th bank in China in terms of market capitalization said it will be floating 5.1 billion on Tuesday at an initial price range of HKD3.83 per share to HKD4.27 per share. The price range will lead to Everbright yielding up to HKD21.8 billion or USD2.81 billion. The price range will also put the Shanghai-listed bank's value at a price-to-book ratio full-year forecast for 2013 of 0.9 to 1.0 times, said Thomson Reuters publication IFR in an earlier report.
Although trading is to start on December 20, the ofer price will be announced on Friday. T
Everbright's float is deemed the biggest one in Hong Kong after Asia's largest refiner China Petroleum & Chemical Corp or Sinopec raised in February USD3.1 billion in its share sale.
China Everbright Securities, China International Capital Corp , Morgan Stanley and UBS AG were tapped by the Chinese bank to manage the float, the report said.
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