Strong demand prompts BOC to sell more shares
At US$11.2b following a 15pc increase, lender's float ranks fourth in the world
Bank of China, the mainland's second-largest lender, has exercised its option to increase the size of its share sale by 15 per cent to US$11.2 billion, making it the world's fourth-largest initial public offering.
The bank yesterday said Goldman Sachs, UBS and BOC International, the bookrunners of the flotation, would sell a further 3.83 billion shares at the offering price of $2.95.
The move has raised the share of BOC's enlarged share capital sold to investors to 11.35 per cent from the original 9.96 per cent.
The sale was heavily oversubscribed by both retail and institutional investors.
The BOC offering is surpassed only by the US$18.4 billion share sale by Japan's NTT Mobile Communications in October 1998, the US$17.4 billion share offer by Italy's Ente Nazionale per l'Energia Elettrica in October 1999 and Deutsche Telekom's US$13 billion listing in November 1996.
However, BOC will not hold the honour for long. The offer is expected to be topped by Industrial and Commercial Bank of China's initial share sale, which could come to market as early as September. The mainland's biggest lender hopes to raise at least US$12 billion on positive market conditions.
After making a stronger than expected trading debut on June 1, BOC's shares have been given an added boost by their inclusion in several market indices, including the FTSE/Xinhua China 25 Index and the MSCI China Index.
Many investors expect BOC to be added to the Hang Seng Index next year after it completes its planned A-share sale in Shanghai this year and Huijin, the government agency that holds almost 70 per cent of the bank's equity, exercises its right to convert its non-tradable shares in the lender into ordinary stock next year.
Tracking the decline of the broader market yesterday, BOC shares fell 1.39 per cent to $3.525 after touching a high of $3.575 on Tuesday - 21.18 per cent more than its offering price.
Earlier this week, BOC said it had applied to the China Securities Regulatory Commission for an A-share offering. The regulator's listing committee will consider the plan tomorrow.
Industry sources said the bank, which planned to tap the domestic market for up to 20 billion yuan, aimed to start marketing the shares next week, with a trading debut set for next month.
The A-share sale will be the first major domestic offering after a year-long moratorium imposed by the central government.