If the issue size is confirmed, it will top the record set by Japanese telecom operator NTT DoCoMo’s IPO in 1998, which raked in $18.4 billion.
HONG KONG: China’s biggest lender, the state-owned Industrial and Commercial Bank of China (ICBC), is preparing for a mammoth initial public offering (IPO) that, reports say, could be the world’s biggest, at $19 billion (over Rs 87,000 crore)!
If the issue size is confirmed, it will top the record set by Japanese telecom operator NTT DoCoMo’s IPO in 1998, which raked in $18.4 billion.
Citing sources, the South China Morning Post reported on Wednesday that the Beijing-based ICBC, one of China’s ‘Big Four’ commercial banks, would sell 53.1 billion shares, or 16% of its enlarged share capital, in a simultaneous offering of so-called ‘H’ shares (listed in Hong Kong) and ‘A’ shares (listed in mainland China, specifically Shanghai).
Earlier estimates had pegged ICBC’s issue size at $12 billion, marginally higher than the Bank of China’s offer earlier this year of $11.2 billion; the Bank of China IPO, which was the world’s fourth largest, was oversubscribed about 75 times, despite concerns about its level of non-performing assets (NPAs).
Preparations for ICBC’s humongous issue, expected later this year, come at a time when mainland authorities have taken initiatives to cool down an economy that’s racing at close to 11%.
Interest rates were raised twice in the past four months, and some curbs on lending were put in place in order to cool down the real estate sector in particular.
It also comes at the tail end of a year of successful share sales by mainland banks, including Bank of China, China Construction Bank, Bank of Communications and China Merchants Bank.
These sales are part of a process to infuse capital into China’s creaking banking system, and subject the sector to the stern glare of scrutiny from shareholders and regulators alike.
Under the terms of China’s accession to the World Trade Organisation, the mainland is required to lift by this year-end the restrictions on overseas banks operating at home. There are, however, concerns that that deadline may not be met.
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