China Citic Bank may raise up to $8.6b in IPO

SHANGHAI - CHINA Citic Bank may raise as much as US$5.7 billion (S$8.6 billion) in a simultaneous Hong Kong and Shanghai initial public offering (IPO), three people with knowledge of the details said yesterday.

The IPO could be the world's largest stock sale so far this year.

The bank, based in Beijing, plans to offer 2.3 billion new shares in Shanghai at 4.66 yuan to 6.1 yuan each to raise up to 14.03 billion yuan (S$2.7 billion), the people said.

It may raise a further HK$30.17 billion (S$5.8 billion) selling 4.89 billion shares in Hong Kong at HK$4.72 to HK$6.17 apiece, they added.

Mainland banks and insurers have sold US$61.1 billion worth of shares in Hong Kong and Shanghai since June 2005, when Bank of Communications became the first domestic bank to go public in Hong Kong.

They have been encouraged by high valuations as investors seek to benefit from China's rapid economic growth.

'This is not a bargain price' for stock in China's eighth-largest bank by assets, said Mr Wu Xuan, a Shenzhen-based analyst at Penghua Fund Management.

There is 'little room for future upside gains if it's priced at the top end', he added.

At the upper end, China Citic Bank's IPO could be the world's largest stock sale so far this year, according to data compiled by Bloomberg.

It could trump a US$5.5 billion closed-end fund launch in the United States and a secondary share sale by Ping An Insurance Group, China's second-largest insurer, which raised slightly more than US$5 billion in February.

The price ranges value Citic Bank at 2.48 times to 2.81 times its estimated book value this year, according to the three people, who declined to be identified before an official statement.

The price ranges have yet to be approved by the China Securities Regulatory Commission.

The new shares to be listed in Shanghai represent a 6 per cent stake in the bank, while those in Hong Kong are equivalent to 12.8 per cent.

The stock may start trading on April 27, Citic Bank said last Wednesday.

BLOOMBERG NEWS