Wednesday, October 18, 2006
Unprecedented demand for ICBC
Strategic investors have placed orders worth $2.3bn for Industrial and Commercial Bank of China's upcoming Shanghai A-share offering, which could raise up to $5.8bn.
China's biggest lender is also set to raise as much as $16bn in a parallel H-share listing in Hong Kong, which will make its initial public offering the world's largest, exceeding the $18.4bn raised by NTT DoCoMo in 1998.
According to a person familiar with the listing, the Hong Kong offering has been so well received - attracting more than $175bn in global demand for its institutional tranche - that it will wrap up its New York roadshow today, a day earlier than planned.
ICBC said the orders for its Shanghai listing were received from 23 domestic companies and financial institutions, led by China Life Insurance (Group) Company, which together with its Hong Kong-listed unit have subscribed for $510m worth of shares.
ICBC said it would reserve as much as 53 per cent of its A-share offering for strategic investors, 23 per cent for institutions and the remainder for investors, prior to the exercise of a clawback provision. The weighting ICBC's strategic placing will have in Shanghai contrasts with the 15 corporate placements it arranged to help support its Hong Kong offering, where local tycoons and investment agencies from Singapore and the Middle East will absorb $3.9bn - or potentially less than one quarter - of the $16bn it stands to raise in the territory.
"It's not a big retail market [in Shanghai] and the institutions want [ICBC's shares] because they think they will go up," one executive said.
ICBC's corporate placements in Hong Kong have been criticised by some investors who say the arrangement leaves less for them. "The guys who make the real money [on ICBC's IPO] are the tycoons - the rich get richer," said one retail investor. However, ICBC's 15 corporate placements are subject to a 12-month lock-up period.
ICBC will be the first company to list in Shanghai and Hong Kong simultaneously, making its offering a test of the two rival markets' relative strengths and weaknesses, while posing some unique risks for investors.
"A-share investors are more bearish on banks and large caps [than Hong Kong investors]," said John Tang, a strategist with JPMorgan in Hong Kong. "Any weakening of ICBC's A-shares could cap the upside for its [Hong Kong-listed] H-shares."
China's biggest lender is also set to raise as much as $16bn in a parallel H-share listing in Hong Kong, which will make its initial public offering the world's largest, exceeding the $18.4bn raised by NTT DoCoMo in 1998.
According to a person familiar with the listing, the Hong Kong offering has been so well received - attracting more than $175bn in global demand for its institutional tranche - that it will wrap up its New York roadshow today, a day earlier than planned.
ICBC said the orders for its Shanghai listing were received from 23 domestic companies and financial institutions, led by China Life Insurance (Group) Company, which together with its Hong Kong-listed unit have subscribed for $510m worth of shares.
ICBC said it would reserve as much as 53 per cent of its A-share offering for strategic investors, 23 per cent for institutions and the remainder for investors, prior to the exercise of a clawback provision. The weighting ICBC's strategic placing will have in Shanghai contrasts with the 15 corporate placements it arranged to help support its Hong Kong offering, where local tycoons and investment agencies from Singapore and the Middle East will absorb $3.9bn - or potentially less than one quarter - of the $16bn it stands to raise in the territory.
"It's not a big retail market [in Shanghai] and the institutions want [ICBC's shares] because they think they will go up," one executive said.
ICBC's corporate placements in Hong Kong have been criticised by some investors who say the arrangement leaves less for them. "The guys who make the real money [on ICBC's IPO] are the tycoons - the rich get richer," said one retail investor. However, ICBC's 15 corporate placements are subject to a 12-month lock-up period.
ICBC will be the first company to list in Shanghai and Hong Kong simultaneously, making its offering a test of the two rival markets' relative strengths and weaknesses, while posing some unique risks for investors.
"A-share investors are more bearish on banks and large caps [than Hong Kong investors]," said John Tang, a strategist with JPMorgan in Hong Kong. "Any weakening of ICBC's A-shares could cap the upside for its [Hong Kong-listed] H-shares."
