China Everbright Bank plans $6bn HK IPO
China Everbright Bank plans to raise about $6bn (£3.7bn) in a Hong Kong initial public offering, Asia’s biggest so far this year.
China’s mid-sized banks are in need of funds to replenish their balance sheets after strong lending growth over the past year has thinned their core capital ratios.
China Everbright, which raised $3.2bn through a Shanghai listing last year, plans to issue 10.5bn new shares, according to a term sheet seen by Reuters. The stock sale would be equivalent to 23.6 per cent of Everbright’s enlarged capital.
“It’s certainly a difficult time to raise funds, but we have seen some pretty good launches,” said Alexander Lee, an analyst with DBS Vickers.
“For Everbright, it has a good brand so it would not be impossible to get the deal done. But the valuation they can get will not be attractive,” he added.
Hong Kong’s benchmark share index has dropped about five per cent this month amid global market jitters and on concerns that China may continue to tighten monetary policy to get inflation under control.
That has hurt market sentiment and investors have balked at some of the recent offerings.
Australian mining startup Resourcehouse pulled its planned $3.6bn IPO earlier this month, while CVC-backed luggage maker Samsonite priced its $1.5bn IPO at the bottom end of a revised price range.
Several other Chinese banks, including Guandong Development Bank and Citic Bank are also planning to raise capital later this year.
Everbright’s planned IPO would top the $5.5bn raised by Hutchison Port Holdings Trust in Singapore in March.
It will use the proceeds to boost capital and lending in coming months, the term sheet said. Pricing is set for July 8, and stock is slated to start trading in Hong Kong on July 15.