Banking News
- CITIC Bank IPO draws keen overseas demand
Date: 17-Apr-2007 Sources: (Shenzhen Daily)
CHINA CITIC Bank, which is raising up to US$5.4 billion in what should be the world's biggest initial public offering (IPO) so far this year, has seen its overseas institutional part more than 30 times oversubscribed before opening to retail investors yesterday, people familiar with the matter said.
On Thursday, CITIC Bank, China's seventh-biggest lender, lowered its fund-raising target and tightened the price range for its IPO despite strong investor interest ahead of the bank's dual Hong Kong and Shanghai listing.
'We adjusted the price range because we hope to leave more room for our investors in the aftermarket,'said Kong Dan, chairman of the bank. Previously, the bank had been aiming to raise US$5.7 billion.
The new range values the lender at 2.57-2.75 times its 2007 book value, compared with 2.48-2.81 times under its old range.
Unlike overseas book building, which involves hundreds of thousands of institutional investors, the domestic book building process involves only some 190 qualified institutional investors. The issuer also has to consult the China Securities Regulatory Commission (CSRC), the securities watchdog, about the indicative price range.
'Both the qualified institutional investors and the CSRC deem the high end of the previous price range was too rich,'said one source familiar with the matter.
The offer, which opened April 10 for overseas institutional investors, will close Thursday, with a trading debut set for April 27.
CITIC Bank is now selling 4.885 billion Hong Kong shares at HK$5.06 (US$0.64) to HK$5.86 apiece, compared with an earlier range of HK$4.72-HK$6.17.
It is selling 2.3 billion A shares to be listed in Shanghai at 5 yuan (US$0.65) to 5.80 yuan each, versus an earlier range of 4.66-6.10 yuan each.
With a lower maximum issue price, market watchers expect investors will crowd into the CITIC Bank IPO to tap the country's 10 percent economic growth and rising consumer spending power.
At the top end of the revised price range, CITIC Bank shares would be sold at a slight discount to some of its bigger rivals.
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