Huishang Bank, a city commercial lender based in Hefei, Anhui province, has secured five cornerstone investors as it kicks off a roadshow today for its long-planned initial public offering in Hong Kong.
Shenzhen-based property developer China Vanke, Hong Kong-based jewellery giant Chow Tai Fook, state-owned manufacturing-to-pharmaceuticals conglomerate Genertec and two mainland individuals had pledged about US$500 million, said a banker involved in the deal.
They will take up 44.2 per cent of the entire offering, assuming the shares are priced at the bottom end of the range.
The lender will start bookbuilding today and the offer is expected to be priced on November 6. Trading is scheduled to begin on November 12, according to the preliminary schedule.
Huishang is offering 2.61 billion shares in an indicative range of HK$3.47 to HK$3.88 each, translating into a price-book ratio of 0.93 to 1.01, based on the expected book value this year - slightly higher than the official requirement of one times if priced at the top end.
Joining the recent popularity of mainland banking stocks, Shanghai-listed China Everbright Bank has received approval from the Hong Kong stock exchange for its third attempt to raise up to US$4 billion from selling 12 billion shares.
One of the major obstacles for mainland banks to list in Hong Kong has been that the book value of their Hong Kong-listed peers traded below the official requirement, making it tough for the listing hopefuls to ask domestic regulators to sell their shares lower than their asset price.
On a brighter note, Huishang's shares are being marketed higher than Bank of Chongqing, which offers a valuation of 0.88 to 0.99 times the expected book value this year, suggesting stronger investor confidence in its asset quality.
Investor demand for mainland city lenders has been tepid this year amid mounting concerns over their dubious connections with local governments, which borrow indirectly through the official-backed investment vehicles or trust entities.
If the deal is priced at the top end, Huishang could raise up to HK$10.1 billion. The share sale will follow that by Bank of Chongqing, which is seeking up to US$593 million in Hong Kong.