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SCMP Reporter

China Construction Bank is expected to generate $40b in its share offering

Large initial public offerings by China Construction Bank (CCB) and Link Reit are expected to push funds raised this year from new listings to a record  $138 billion, according to PricewaterhouseCoopers (PwC).

In the first six months, $60.5 billion was raised - an 8 per cent year-on-year increase - thanks to offerings by Bank of Communications and China Shenhua Energy.

'China Construction Bank is likely to raise up to $40 billion while Link Reit aims for $20 billion. We expect the two to kick off their offerings by the end of this year,' said Richard Sun, a partner in the PwC capital market services group.

The last record fund-raising year was 2000, with new listings tapping the Hong Kong market for $132 billion.

Mr Sun is optimistic  that CCB can go public this year, noting the Beijing-based lender had  successfully introduced Singapore's state-owned investment firm Temasek Holdings and Bank of America Corp as strategic investors.

The legal challenge to the Housing Authority's Link Reit listing also will be clearer soon.

The Court of Final Appeal began a hearing yesterday and was expected to issue a ruling within a month.

The Housing Authority has said it hopes to relaunch the Link Reit  soon  after a verdict. Link Reit originally planned to raise $23 billion in its listing scheduled for last year.

To achieve PwC's $138 billion fund-raising target, the market needs to yield a further $77.5 billion in the second half of this year.

CCB and Link Reit will account for $60 billion and Mr Sun said smaller offerings could easily fill the $17.5 billion gap.

Although recent newcomers  such as China Cosco Holdings,  Sim Technology Group and GST Holdings all fell on their trading debuts, PwC capital market services group partner Edmond Chan said this  was unlikely to cast a shadow over other listings.

'First-day performance means nothing. We believe potential listing candidates won't be scared by poor trading debuts,' he said.

The accounting firm expects 60 new listings this year, 45 on the main board and 15 on the Growth Enterprise Market (GEM).

High oil prices and rising interest rates are concerns for fund-raising, exerting pressure on global stock markets and dampening investment sentiment.

United States interest rates rose a further 25 basis points last week, followed by Hong Kong banks  pushing their prime lending rate to as high as 6.5 per cent.

Mr Sun believes oil and rates soon will not be dampening factors. 'Crude oil prices seem to have already peaked and we expect the US will only have another two rate increases before the  rise cycle ends,' he said.

There were 21 new listings  in the first half of this year, a 45 per cent drop year on year. Compared with the main board, the GEM offered slim pickings. Only two companies, Finet Group and Sungreen International Holdings, raised a combined $82 million.



Funds from IPO rush to reach high of $138b