China Citic Bank, the mainland's seventh-largest commercial lender, is considering selling a stake of as much as 10 per cent to a foreign strategic investor before its planned initial public offering, expected to be in Hong Kong.
Citic International Financial Holdings (CIFH), the Hong Kong-listed financial arm of Citic Group, intends to bring in the same strategic investor.
'Our strategy is to grow in China, then expand in Greater China and the whole region as soon as possible, so we need a world-class investor,' said Doreen Chan Hui Dor-lam, the managing director at CIFH.
Although CIFH chief executive David Dou Jianzhong said the company had not set a target price for the stake sale, mainland lenders have generally fetched 1.15 to 1.88 times book value when selling shares to strategic investors.
CIFH is buying 16.4 per cent of Citic Bank for $5.17 billion, or 1.153 times Citic Bank's net asset value, and expects the deal to close before end of this year.
The stake had been pegged at 19.9 per cent when the deal was struck in April, but Citic Group's capital injection of five billion yuan into the bank diluted CIFH's holdings.
