Huishang Bank has joined the queue of companies seeking an initial public offering (IPO) in Hong Kong while the gate for listing in the A-share market remains closed.
The Hefei, Anhui province-based bank has invited investment banks to bid for advisory roles for an IPO in Hong Kong, a Bloomberg report said yesterday, citing unidentified sources. The lender is seeking to raise about US$1 billion and planning a share sale next year, it said.
Calls to Huishang Bank's Hefei office went unanswered yesterday.
Huishang Bank shareholders approved its listing plan in 2011, while the bank targeted an IPO in the A-share market last year seeking to raise about 10 billion yuan (HK$12.56 billion). However, the China Securities Regulatory Commission has frozen IPO approvals to facilitate stricter vetting of applicants since December last year.
City commercial banks such as Bank of Chongqing, Bank of Shanghai and Bank of Dalian, which originally applied for A-share listings on the mainland, are now looking to launch IPOs in Hong Kong.
Chen Xingyu, an analyst with Phillip Securities in Shanghai, said city commercial banks on the mainland were facing increasing capital pressure, but their financial conditions were strong as most of them received local government support. "They may not be in urgent need of funds, but the problem is no one knows when the A-share IPO market will reopen," he said.
Chen said Huishang Bank would be more conservative in setting offer prices in a Hong Kong IPO as more international investors were expected to subscribe for the offering.
Timothy Li, an analyst with brokerage firm Core Pacific-Yamaichi, said the timetable for the reopening of the A-share IPO market was difficult to estimate, so these banks would opt for another channel in Hong Kong. "Quite a number of mainland banks are seeking an IPO in Hong Kong. Their ability to draw investors' interest will depend on their financial conditions and pricing," Li said.
Huishang Bank's profit for last year was 4.3 billion yuan, an increase of 23.3 per cent from the previous year. The bank's non-performing loan ratio as of the end of last year was 0.58 per cent, 10 basis points higher than a year ago.