China Everbright Bank
China Everbright Group is a state-run financial conglomerate. Its operations include China Everbright Ltd, which listed in Hong Kong in 1997 with the stock code 165, and China Everbright Bank. Another unit, brokerage China Everbright Securities, was penalised in August 2013 after a trading glitch caused a spike of more than 5 per cent in China’s stock indexes on August 16.
Everbright to double size of Hong Kong share sale
Twice-delayed float expected to be increased to US$4 billion to help Beijing-based bank meet higher capital adequacy requirements
China Everbright Bank, which is preparing for its third official listing attempt, plans to double the size of its long-planned Hong Kong offering to up to US$4 billion by selling 12 billion shares.
This was aimed at covering more stringent capital requirements on the mainland, sources said.
The Beijing-based lender has mandated investment banks CICC and Morgan Stanley to take lead roles in arranging the share sale and gauge investor feedback, after it resubmitted its listing application to the exchange last week.
The share stake put up in the float is set to be 25 to 30 per cent of the total, up from about 15 per cent last year, when the bank had secured more than US$1 billion from cornerstone investors. It was reported that Everbright was seeking a US$2 billion listing.
A significant rise in the benchmark 10-year US treasury yields prompted the cash-strapped bank to issue more shares, as the cost of funding was inevitably on an upward trend, a banker said.
"Poor market conditions and investors' scepticism over new shares have increased the difficulty for Everbright's IPO," he said. "Valuation of the shares is the only key to its Hong Kong listing, as it must take at least a 10 per cent discount to its A shares."
It was reported that Everbright originally planned to go public after the Agricultural Bank of China's listing in late 2010 but stumbled because of unkind market conditions and regulatory hurdles such as the minimum valuation requirement of at least one times book value.
Everbright's capital adequacy and core tier-one capital adequacy ratios were 9.9 and 7.5 per cent, respectively, as of March, and analysts said it badly needed to complete the Hong Kong listing to replenish its capital base. Everbright's Shanghai-listed shares have risen 2.3 per cent this year.
In an attempt to prevent another failed share launch, the bank has requested a sizeable cornerstone subscription of at least 60 per cent of the offering before opening to retail investors.
Among other city and provincial-level bank listings, Bank of Shanghai, in which HSBC holds an 8 per cent stake, aims to be the first company to get "full fungibility", meaning the management of state-owned firms will get no restrictions on the transfer of shares in the secondary market.
Bank of Shanghai could raise up to US$800 million next year, according to bankers.
Joining the spin-off trail in Hong Kong, New World Development, controlled by Cheng Yu-tung, is preparing to attend a listing hearing next Thursday for an US$800 million listing of its hotel assets.
Shares in Langham Hospitality Investments, a hotel-focused business trust spun off by Great Eagle Holdings, have fallen 11 per cent since they came on the market last week and could weigh down demand for New World's hotel assets.