Mainland lender lifts cap on share allocations to 12 backers due to strong demand from tycoons
Bank of China has earmarked US$1.92 billion worth of shares for 12 key investors, mainly local tycoons, in its estimated US$8 billion offering, sources say.
The mainland's second-largest lender has verbally agreed to allocate to each investor US$160 million worth of shares with a 12-month lock-up period. The agreements are expected to be signed this week.
Sources said the lender originally planned to cap the amount of shares sold to key investors to 20 per cent, but overwhelming demand from tycoons - who are believed to include Henderson Land Development chairman Lee Shau-kee and New World Development chairman Cheng Yu-tung - had pushed it to remove the limit.
BOC, which began pre-marketing its float yesterday, intends to sell its shares at a discount to its Hong Kong-listed mainland peers such as Bank of Communications and China Construction Bank Corp, says a report by BOC International. BOCI, Goldman Sachs and UBS are the bookrunners.
In the report, BOCI said the bank might float its shares at two to 2.3 times their estimated book value this year, a discount to Construction Bank's 2.34 times and Bocom's 2.47 times.
Meanwhile, a report by UBS says that, assuming a return on equity ratio of 14.9 to 15.6 per cent this year, BOC will be offered at 2.08 to 2.4 times its book value.