Minsheng to watch and wait
China Minsheng Banking Corp will not launch its initial public offering in the first half of this year as the management is waiting for the share sale of larger rival Bank of Communications to be completed before deciding how to value its own offer, sources say.
This suggests the float will be delayed at least until August as a listing candidate needs to include its first-half profit and loss account and balance sheet in the listing document if a prospectus has not been published before the end of June.
A launch of the offer by 'the end of June is definitely impossible', one banking source said, but added that the lender was aiming to come to market before the end of the summer.
The private mainland bank received Hong Kong listing approval on June 2, but so far it has not engaged in any pre-marketing or distributed any pre-offer research.
Sources said Bocom's decision to set its indicative price range at a level that valued the company at a lower than expected 1.39 to 1.82 times book value (if priced at the middle of the range) played a role in Minsheng's delay.
Minsheng, which initially planned to raise about US$800 million, is expected to price its offer at a discount to Bocom, but because it has shareholders who will be selling shares during the float, it is also under pressure to maintain their value.
'The selling shareholders have different motivations ... they want to receive a higher return on their investments,' a source said.
Minsheng's A shares currently trade at a price-book ratio of about 2.4 times, which compares to 2.2 times for global banking giant HSBC Holdings.
Bocom is due to price its hugely popular share offer by Saturday, which will give Minsheng only two weeks to do its pre-marketing and launch the official institutional roadshow and Hong Kong public offering before the end of this month - a process which normally takes at least four weeks.
Deutsche Bank, Citigroup and Goldman Sachs, global co-ordinators for the float, declined to comment, as did Minsheng.
