Agricultural Bank, the last of China's big state-owned banks to go public, is set to raise more than $22 billion from an initial public offering (IPO), defying global market weakness to stage the world's largest IPO.
Original forecasts had put potential proceeds from the offering at a whopping $30 billion, much more than what the bank, also known as ABC, will actually take in. But the lender had little choice about timing.
"The IPO's timing was not up to ABC itself. It simply has to get this IPO assignment done to raise funds in the market to fulfill its cash requirements," said Zheng Ning, an analyst at Founder Securities in Beijing.
ABC is selling 25 billion shares in Hong Kong and 22 billion shares in Shanghai. Based on Tuesday's pricing, the rural lender would raise about $19 billion, according to sources.
If underwriters buy about $3 billion more shares to sell to investors in an overallotment, or greenshoe, option, the dual listing could raise $22 billion — the most funds ever for an IPO. Industrial and Commercial Bank of China raised $21 billion in its October 2006 IPO — the existing record and the only other time a company listing in Shanghai has used a greenshoe option. Investors were unprepared to pay the original higher price suggested for the shares because ABC is viewed as less profitable than its urban-focused competitors. In Hong Kong, it's shares are priced at HK$3.2 each (41 cents), the midpoint of the expected range. In Shanghai, shares are priced at 2.7 yuan (40 cents), top of the expected range.
Proceeds would total HK$81.31 billion ($10 billion) in Hong Kong and 60 billion yuan ($9 billion) in Shanghai.
The bank's shares are due to begin trading July 15 in Shanghai and a day later in Hong Kong.