Banking

Bank boosted by Hong Kong IPO

By Fox Hu (China Daily)
Updated: 2010-12-10 10:28
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HONG KONG - Chongqing Rural Commercial Bank Co raised HK$11.5 billion ($1.48 billion) by selling stock in a Hong Kong IPO, according to two people with knowledge of the transaction.

The lender in Chongqing sold 2.19 billion shares at HK$5.25 apiece after offering them at HK$4.50 to HK$6.00 each, said the people. Morgan Stanley and Nomura Holdings Inc managed the sale.

Chongqing Bank braved a 7 percent slump in the benchmark Hang Seng Index from the Nov 8 peak that has forced companies, including Bluestar Adisseo Nutrition Group, to delay public offerings.

Chongqing Bank will be "unique" as it is almost fully exposed to the Chongqing area while its listed counterparts have "much higher geographical diversity", Mike Werner and Wangshu Qiu, Hong Kong-based analysts at Sanford C Bernstein & Co, wrote in a note on Dec 7.

The lender is scheduled to start trading in Hong Kong on Dec 16. Fubon Life Insurance Co, Chow Tai Fook Nominee Ltd, Nexus Capital Investing Ltd and Value Partners Ltd are among the institutional investors for the listing, according to the prospectus.

The city of Chongqing, with a population of 32.3 million, posted average economic growth of 18.2 percent over the past three years, compared with the national rate of 13.2 percent, according to government figures.

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Chongqing Bank, the ninth and smallest Chinese bank to list in Hong Kong, was established in June 2008 after the government merged rural cooperatives in the region. It had 62,000 corporate and 17.5 million retail customers, according to its prospectus.

The lender, with 1,763 outlets in Chongqing, had 262 billion yuan ($39 billion) of assets as of June 30. The bank forecast profit of at least 2.85 billion yuan this year, an increase of 51 percent from 2009. Still, Chongqing Bank's ratio of non-performing assets stood at 2.99 percent as of June 30, the highest among the listed peers.

About 91.5 percent of the stock sold was new shares and 8.5 percent was existing equity from China's state pension fund.

Companies have raised a record $50 billion from Hong Kong IPOs this year, according to data compiled by Bloomberg that include overallotment shares.

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