Banking

ABC may raise $15b from HK part of IPO

(Agencies)
Updated: 2010-06-14 13:38
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Agricultural Bank of China(ABC) may raise as much as $15 billion in the Hong Kong part of what could be the world's largest initial public offering, according to an e-mail sent to investors.

The bank, China's largest by number of customers, will sell $10 billion to $15 billion of shares in Hong Kong, according to the e-mail to institutions. Banks arranging the IPO will start gauging investor demand for the sale today, the document said. ABC is also selling stock in Shanghai.

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ABC may raise at least $23 billion from the total offering, people with knowledge of the matter said last week. The IPO, likely to surpass the $22 billion sale by Industrial & Commercial Bank of China Ltd in 2006, coincides with an equities rout that's caused more than 30 companies to cancel or delay IPOs globally since the end of April, according to data compiled by Bloomberg.

"The market is still very discerning," said Tim Schroeders, who helps manage about $1.1 billion at Pengana Capital Ltd in Melbourne. "The deal has got to be really attractively priced to get away with it."

ABC, based in Beijing, is starting the IPO after the MSCI World Index has slid nearly 10 percent since the end of April amid concerns about the European debt crisis and worries about global economic recovery.

Pulled sale

Xinjiang Goldwind Science & Technology Co, a Chinese wind- turbine maker, scrapped a plan to raise as much as HK$9.09 billion ($1.2 billion) in a Hong Kong share sale, said two people with knowledge of the matter today. Some investors decided to skip the Goldwind offering in favor of Agricultural Bank's IPO, according to one person, who declined to be identified because it hasn't been publicly announced. Goldwind spokesman Thomas Yao declined to comment.

ABC is selling 25.4 billion shares in Hong Kong and 22.2 billion shares in Shanghai, it said in a draft prospectus posted on China Securities Regulatory Commission's website. The top end of Hong Kong offering size indicated in today's e-mail would allow the bank to raise $19 billion to $28 billion in the two cities combined.

ABC is reserving as much as 40 percent of the Hong Kong shares for corporate investors who will agree not to sell their holdings for a few months in exchange, said two people with knowledge on June 9. Rabobank Groep NV, Qatar Investment Authority, Kuwait Investment Authority and Archer Daniels Midland Co were among those in advanced talks to buy shares through this arrangement, they added.

ABC plans to start taking orders from institutions for the Hong Kong share sale on June 24 and price it on July 6, said a separate e-mail to investors. The stock will start trading in Hong Kong on July 16.

China International Capital Corp, Goldman Sachs Group Inc, Morgan Stanley, JPMorgan Chase & Co, Deutsche Bank AG, Macquarie Group Ltd and ABCI Securities are managing the sale.