China Everbright delays IPO

China Everbright Bank will delay an initial public offering (IPO) in Hong Kong for a second time in less than two months.

The postponement is due to worries that the current market volatility would hinder a successful IPO, said people with knowledge of the matter.

They said the bank will postpone the share offering to an unspecified date later this year.

'[China] Everbright is in a dilemma,' said an investment analyst in Beijing, who did not want to be named.

'The bank does not want pricing of the shares to be much lower than its A shares. However, such a level is not attractive to international investors, especially when the market has big swings and bank shares were avoided recently,' said the analyst.

The Beijing-based, mid-sized lender started promoting the planned sale of 12 billion H shares in June. It previously postponed what could be the biggest IPO in Asia this year to between July and August 18.

The bank was not available for comment. Shanghai-traded shares of the lender fell 1.88 per cent to 3.13 yuan (HK$3.80) yesterday, a plunge of 21 per cent since the beginning of the year.

China Everbright is seeking a valuation of 1.5 times book value, much higher than the market valuation of 1.2 times for similar-sized banks that trade in Hong Kong. Shares of those banks slumped in the H-share market yesterday.

H shares of mainland banks lost as much as 4.8 per cent yesterday as the Hang Seng Index slumped 4.29 per cent, after a financial-markets rout signalled fears that the US economy may fall into another recession.

China Everbright has considered issuing fewer shares for a minor concession on valuation. However, the latest market turmoil suggests little hope for a successful IPO in the near future without a price cut, people with knowledge of the matter said.

The bank must finish the listing by the end of September or the Hong Kong bourse will require it to file updated financial reports. If the offering is further postponed, competition will intensify. Three other mainland banks will raise capital during the second half of 2011 or in early 2012.