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Eric Ng

Sandy Li

At least nine top local corporations are expected to commit at least US$700 million to the initial public offering of BOC Hong Kong (Holdings) as strategic investors, according to informed sources.

Their subscription could exceed 20 per cent of the planned total fund-raising target.

They are Cheung Kong (Holdings), Hutchison Whampoa, Sun Hung Kai Properties, Henderson Land Development, Kerry Group, Lai Sun Development, Citic Pacific, Great Eagle Holdings and Hang Lung Development.

Cheung Kong and Hutchison are together expected to buy up to US$200 million worth of BOC Hong Kong (Holdings) shares. Sun Hung Kai is expected to buy the same, while the rest intend to each commit at least US$50 million, the sources said.

Cheung Kong and Hutchison chairman Li Ka-shing offered support yesterday to the BOC Hong Kong (Holdings) share offering, which will see its parent, Bank of China, raise up to HK$25 billion through the sale of as many as 2.64 billion existing shares at between HK$6.93 and HK$9.50 each.

Mr Li said: 'We definitely will subscribe for a substantial amount of shares to show our support.'

He refused to disclose the size of his firm's commitment but said 'the size will be larger than Standard Chartered Bank's investment'.

On Sunday, BOC Hong Kong (Holdings) said Standard Chartered would make a HK$390 million strategic investment as part of the offering. Its investment will represent less than 2.5 per cent of the total share offering for a stake in the bank of less than 1 per cent.

A spokesman from the Sun Hung Kai Properties declined to comment on its investment size, but said 'the group will support the new listing'.

Sources close to the underwriting syndicate said the corporate investors would not be restricted from selling their shares after the listing, unlike strategic investor Standard Chartered whose BOC Hong Kong (Holdings) shares will be subject to a 12-month lock-up.

Introduction of blue chip strategic shareholders with lock-up arrangements are common among mainland corporations ahead of their global shares offers and listings, such as the cases of China Mobile, PetroChina and China Petroleum and Chemical (Sinopec).

Such investments are intended to reduce post-listing share price volatility but analysts and fund managers said that in the case of BOC Hong Kong (Holdings), the lack of lock-up periods for corporate investors would reduce the stabilising effect. Such hefty commitments should, however, bolster investor sentiment towards the bank, which has low growth prospects and high levels of non-performing loans.

Investment by SAR corporations, most of which have substantial business on the mainland, would help foster closer relationships with BOC Hong Kong (Holdings) and its parent.

Meanwhile, the initial public offering of Mr Li's biotechnology venture, CK Life Sciences International (Holdings), generated 120.8 times oversubscription for the retail portion.

CK Life chairman Victor Li Tzar-kuoi said about 40 per cent of the subscription came through online application. 'We are extremely satisfied with the re sponse given the market conditions,' he said.

The result for the international placement could not be released for legal reasons, he said.

Pricing for the CK Life shares will be finalised today and the result announced on Monday. The new share offering is between HK$1.80 and HK$2 each.



Blue chips circle BOC offer