Bank of Shanghai, China Everbright plan to go public in Hong Kong
Rebound in valuations of listed peers lifts hopes of Bank of Shanghai and China Everbright
Ray Chan and Kanis Li
Bank of Shanghai and China Everbright Bank are relaunching their plans to go public in Hong Kong to raise a combined US$2.5 billion.
Boosted by a recovery in valuations among listed mainland banks since early September, the share offers could go ahead as soon as the second quarter, say people familiar with the plans.
Bank of Chongqing, a mid-sized lender based in southwest China, may also consider a Hong Kong initial public offering for a US$500 million share sale since mainland regulators have suspended evaluations of proposed domestic public offerings.
"After clearing the listing application process with the local bourse, Bank of Shanghai, the biggest municipal-level lender by market capitalisation with a focus on the prosperous Yangtze River Delta region, may tap the Hong Kong market in late May with a US$1 billion share sale," said a banker with direct knowledge of the deal who requested anonymity.
Higher valuations of listed mainland banks have boosted the chance for them to win regulatory approval for public listings, but the overall demand for new shares remains tepid, given the difference between the prices that issuers hope to achieve and how much investors are willing to pay.
The price-to-tangible-book value of Hong Kong-listed banks has improved significantly to an average of 1.5 times after their share prices surged more than 40 per cent since September.
Along with other city commercial banks on the mainland, Bank of Shanghai - in which HSBC holds an 8 per cent stake - has been preparing its listing for years but has had to put the plan on hold because of investor concerns about its non-performing loans and corporate governance.
China Everbright Bank's share issue might raise about US$1.5 billion and follow a listing by Bank of Shanghai, but the schedule remained tentative at this juncture, said two people familiar with the deal. China Everbright is already listed in Shanghai.
Gary Wang, managing director and chief executive of Dah Sing Bank, said it was premature to discuss whether a Bank of Chongqing listing would dilute Dah Sing's interest in the lender.
Bank of Chongqing is classified as an associate company of Dah Sing, which holds a 20 per cent stake.