• Tue
  • Sep 2, 2014
  • Updated: 10:08pm

BOC offer attracts $72.8b in orders

PUBLISHED : Friday, 12 May, 2006, 12:00am
UPDATED : Friday, 12 May, 2006, 12:00am
 

Heavy demand sees institutional book covered in a few hours


Bank of China, the mainland's second-largest lender, received overwhelming response to its giant initial public share offering with the institutional book being fully covered on the first day of opening yesterday, attracting at least $72.86 billion worth of orders.


According to sources, the institutional book was fully covered in just a few hours and orders kept flowing in, most of them not setting any price limits.


'I'm not surprised,' said Andy Mantel, the managing director of Pacific Sun Investment Management (HK). 'The timing is good to launch this initial public offering.'


As the third large mainland bank to sell shares in Hong Kong after smaller peers Bank of Communications and China Construction Bank Corp, BOC is benefiting from reduced concern about investing in banking stocks.


The bookrunners had indicated it would be very difficult to get a full allotment and given such hot response, it would not be surprising to see the lender price its shares at the top of the price range, said another fund manager.


The Beijing-based lender is offering 25.56 billion shares at between $2.50 and $3 each to raise up to $76.7 billion, or 1.89 to 2.17 times its book value this year.


Of the shares offered, 95 per cent have been earmarked for institutional investors. Retail investors take up the remainder.


Contributing to the quick filling of the institutional book was the fact that $17.52 billion worth of shares, or about 22 per cent of the offered shares, has been earmarked for 12 corporate investors.


China Life Insurance Group and its Hong Kong-listed unit will take up $2.32 billion in shares, Sino Land will be allocated $1.24 billion and the remaining 10 investors, including local tycoons and Japan's Mitsubishi UFJ Financial Group, will get $1.39 billion worth of shares each, according to a preliminary prospectus distributed yesterday.


The local tycoons and renowned groups include Bank of East Asia, Cheung Kong (Holdings), Hutchison Whampoa, Ping An Insurance, Sun Hung Kai Properties, Kuok Group, Nan Fung Group, Henderson Land chairman Lee Shau-kee, New World Development chairman Cheng Yu-tung, and Wharf (Holdings) chairman Peter Woo Kwong-ching. All the corporate investors have agreed not to sell their shares within 12 months of the listing.


The retail tranche of the share sale will run from May 18 to 23 ahead of the trading debut on June 1. Goldman Sachs, UBS and BOCI are arranging the sale.


BOC forecast net profit to surge at least 27.3 per cent to 33 billion yuan this year. The company will pay out 35 per cent to 45 per cent of its net profit as dividend in the second half and in each of the next two years.


The amount of money involved in criminal offences committed by its employees grew 12-fold last year to 1.17 billion yuan as the number of cases reported to the head office more than doubled from 32 to 75. The bank attributed the increase to tightening internal controls.


As part of efforts to reform its incentive scheme, BOC said it had adopted a share appreciation scheme for its directors, supervisors and managers. Last year, it set up a contribution annuity plan for employees in addition to required contributions to government pension funds.


Strategic investors (%)


Asian Development Bank 0.208


UBS 1.387


Royal Bank of Scotland 8.6


Temasek Holdings 4.879


National Social Security Fund 4.498


Corporate investors ($b)


China Life Group 2.325


Bank of East Asia 1.395


Bank of Tokyo-Mitsubishi UFJ 1.395


Cheung Kong and Hutchison Whampoa 1.395


Chow Tai Fook 1.395


Lee Shau-kee 1.395


Kuok Group 1.395 1.395


Nan Fung Group 1.395


Ping An Insurance 1.395


Sun Hung Kai Group 1.395


Sino Land Group 1.240


Peter Woo Kwong-ching 1.395


Total 17.521


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