IPO-hopeful Huishang Bank to meet Hong Kong stock exchange listing committee
Anhui city lender hopes to raise US$1.5 billion in offering before the end of the year after waiting for years to list on the stock market
Huishang Bank, a mainland city commercial lender, will present its case for a share sale to the listing committee of the Hong Kong stock exchange next week as it seeks to raise US$1.5 billion before the end of the year, according to people familiar with the matter.
Huishang, based in Hefei, Anhui province, is seeking the go-ahead for an initial public offering of its shares after Hong Kong-listed shares of mainland banks rose.
Even if the meeting with Hong Kong Exchanges and Clearing goes smoothly and Huishang gets the approval from the securities regulator, the board of directors of Huishang, partly owned by the Anhui provincial government, has no plan to immediately begin a pre-marketing campaign, bankers say.
In theory, it could launch its public campaign as early as next week, depending on market conditions.
Bankers said an unnamed Jiangsu-based company had pledged to invest US$250 million to become a so-called cornerstone investor.
They added that all the shares were expected to be bought by funds of funds that wanted to own stakes in small mainland banks.
Huishang, which had waited for years to list in the mainland share market, opted for a Hong Kong float because the door for Shanghai listings has remained closed since November last year.
"A successful listing for Huishang will be a symbolic event for China's city commercial banks," said an American banker who declined to be named.
To ensure their listing applications were approved, banks such as Huishang would have to boost their liquidity ratios, improve their risk management and safeguard against systemic risk, he added.
Competition and a more complex operating environment had already begun to force smaller lenders to focus on internal controls and efficient reporting systems, he said.
That trend had intensified in the wake of the "fat-finger" trading error on the Shanghai exchange in August that caused wild swings in stock prices and led to a fine for Everbright Securities, he added.
Huishang was founded in December 2005 and has more than 5,500 employees, according to its website.
Also in the queue for a Hong Kong float is Bank of Chongqing, which is 20 per cent owned by Hong Kong's Dah Sing Bank.
It is likely to start pre-marketing a float aimed at raising a trimmed-down US$800 million as early as next week after winning listing approval from regulators last week.
Meanwhile, mainland media reports say the China Banking Regulatory Commission will allow 11 banks to sell asset management plans directly to customers under a pilot scheme.