Bank of China, the mainland's second-largest financial institution, has been approved to raise up to 20 billion yuan in a domestic initial public offering within six months, sources say. The bank's board has approved the sale of up to 10 million A shares but the sources said the final deal probably would be much smaller. 'They've just reopened the domestic markets to IPOs and there's no way one of the first deals out is going to be that huge, especially since the largest deal to date is only 11.2 billion yuan,' a source said. China Unicom, the smaller of the mainland's two mobile-telephone carriers, raised that amount in 2002. China Merchants Bank raised 10 billion yuan the same year in the second-largest domestic offer, according to Dealogic. Beijing shuttered the mainland's exchanges early last year, after stocks on the Shenzhen and Shanghai markets hit seven-year lows, to deal with the overhang of government-owned shares. Such shares accounted for more than two-thirds of market capitalisation. Beijing is looking for blue-chip firms to sell shares now that that process is mostly over and the stock markets are on the way up. The Shanghai Composite Index has risen 33 per cent this year and the Shenzhen index is up 37 per cent. BOC could raise up to $76.8 billion in the largest public offering in six years, surpassing China Construction Bank's $71.8 billion sale in October last year. The deal starts marketing today and the H shares will begin trading on June 1. BOC's overseas offering was delayed from the first quarter after regulators insisted it sell A shares at the same time. A compromise was reached in which the bank agreed to an A-share sale at an unspecified date after listing in Hong Kong. Those in favour of a domestic listing were chastened by the fact that China is the only market in the world where the largest firms list overseas and not at home.
