Initial Public Offering (IPO) Process
The Bank of Communications (BoCom), China's fifth-largest commercial lender, made its initial public offering (IPO) debut in Hong Kong on Thursday, trading 5.856 billion H shares at HK$2.5 (32 US cents) per share.
The IPO was geared to raise HK$14.65 billion (US$1.89 billion), the second-largest offering so far in Hong Kong this year, after Shenhua Energy, which netted HK$28.34 billion (US$3.65 billion).
BoCom ran an extensive series of roadshows from June 6 to 19 in international financial hub cities in Asia, Europe and North America.
The bank will put 65 per cent of the offering in the Asia market, 23 per cent in Europe and 12 per cent in North America.
About 20 per cent of the shares on offer will be sold to public investors, and 60 per cent will go to international investors including overseas institutions, corporates and high net worth investors.
Global financial giant HSBC, which holds 19.9 per cent of BoCom's shares, will digest the balance 19.9 per cent of the IPO to maintain its position in the bank's directorate.
On Thursday, BoCom was over-subscribed by 200 times the public tranche and by 20 times the international tranche.
This public purchasing eagerness encouraged BoCom to reset the sale proportion for the public tranche from the original 5 per cent to 20 per cent.
The IPO price of HK$2.5 is close to the upper end of the offer range, which was set at HK$1.95 to HK$2.55.
The IPO price is reasonable, said Ronald Wan, executive director of the Hong Kong-based investment bank SBI E2-Capital.
Wan also revealed that market observers expect a 10 per cent value increase for BoCom's shares.
HSBC is the bank's big shareholder and BoCom is the first domestic bank getting listed in Hong Kong, which delivers confidence to investors, he said.
BoCom's IPO performance will act as a weather vane for other mainland banks waiting to be listed in the SAR.
(China Daily June 23, 2005)