Minsheng offering draws US$14b of orders from global investors
China Minsheng Banking Corp, planning to raise as much as HK$31.56 billion through a Hong Kong listing, has drawn US$14.1 billion worth of orders from international investors before opening its initial public offering to local investors, a banking source familiar with the deal said.
The mainland's eighth-largest lender by assets will open its offering to retail subscription today, with the required minimum investment being about HK$4,800.
The shares are priced at HK$8.50 to HK$9.50 each.
The institutional tranche has already been about three times oversubscribed since book building was launched on Monday.
The investors included Beijing-based Hopu Investment Management, the US$2.5 billion fund run by leading investment banker Fang Fenglei; financier George Soros; and Tiger Fund, a source close to the deal said.
Kenny Tang Sing-hing, the head of research at Redford Securities, said the stock's valuation was acceptable, given the bank's promising outlook.
Minsheng said earlier it had made loss provisions of 824 million yuan (HK$935.4 million) relating to its investment in UCBH Holdings, whose unit, United Commercial Bank, last week became the 120th bank in the United States to fail this year.
United Commercial, a San Francisco-based lender with US$11.2 billion in assets, was seized by regulators. It had been bought by East West Bancorp of California, the Federal Deposit Insurance Corp said.
The bank had 63 branches in the US, one in Hong Kong and a subsidiary, UCB-China, in Shanghai. They will now reopen as part of East West Bank.
Minsheng spent 887 million yuan in two instalments, in October 2007 and December last year, for a stake of about 9.9 per cent in UCBH.
Minsheng president Hong Qi said the provision for the investment loss in UCBH was adequate but a lesson the bank would need to take to heart.
He said it was part of the bank's strategy to globalise. The bank would need to study more about international regulations and investment environment in future ventures, he said. 'It will not affect our strategy to globalise,' he added.
The bank's management expects its capital adequacy ratio will increase to more than 12 per cent from 8.57 per cent after the share sale, while core tier-1 capital will rise to about 9 per cent from 6.02 per cent.
The bank has forecast its consolidated net profit for this year will not be less than 11 billion yuan. Its assets stood at 1.4 trillion yuan at the end of September while loans amounted to 893.5 billion yuan and deposits 1.1 trillion yuan.
Hong said the bank would continue to enhance corporate governance and had hired risk management and product innovation experts from Wall Street in the wake of the global financial crisis.
Hot issue
The lender will open its share sale to retail investors today
Minsheng Bank has priced its initial offer at a maximum of, in HK$ per share: $9.50
Aiming high
China Minsheng Banking Corp initial public offering
Total offering: 3.32 shares
Hong Kong public offer: 166.09m shares
International offer: 3.16b shares
Offer price range: Hk$8.50- HK$9.50
Board lot size: 500shares
Public offering opens: Nov 13
Public offering closes: Nov 18
Trading to start: Nov 26
