Everbright Bank puts IPO plan in motion

PUBLISHED : Saturday, 23 February, 2008, 12:00am
UPDATED : Saturday, 23 February, 2008, 12:00am

China Everbright Bank, the eighth-largest bank on the mainland, has hired three domestic banks to arrange an initial public offering of at least US$1 billion in Shanghai by the end of the year.

China International Capital Corp, China Jianyin Investment Securities and Shenyin & Wangguo Securities were mandated to underwrite the deal, while affiliate Everbright Securities and Hongyuan Securities will act as financial advisers, the bank said yesterday.

KPMG has been hired to audit the company while Beijing-based King & Wood will provide legal services.

The bank has received a US$2.8 billion government bailout and still needs to cover US$1 billion in accumulated losses.

The bank is seeking at least that amount from a foreign bank, people familiar with the situation have said. China Everbright Bank hoped to sell a stake of about 10 per cent in a process that could take about six months to complete, the sources said.

'This is going to be a tough one because it's been around for a long time and China Everbright probably has more issues than a number of other banks,' said a person close to the bank. 'Valuations have also come off but expectations may still be fairly high.'

Standard Chartered Bank had been in on-and-off talks with China Everbright for about two years but was not able to secure a stake.

Parent China Everbright said on Wednesday that China Everbright Bank had earned a net profit of 4.6 billion yuan last year.

China Everbright Securities also earned a profit of 4.6 billion yuan that year, the company said. It did not offer comparative figures. China Everbright Securities is also planning to sell shares in Shanghai this year.

China Everbright owns a 21 per cent stake in China Everbright Bank and 30 per cent in China Everbright Securities.

The Asian Development Bank, China Everbright Bank's only foreign shareholder, has a 2 per cent stake.

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China Everbright Bank posted a net profit last year, in yuan: yuan 4.6b