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Minsheng closes in on float

By Wang Bo (China Daily)
Updated: 2009-10-13 08:09

Minsheng Bank's booth at the Beijing International Finance Expo on Sept 25, 2008. [Asiannewsphoto]

China Minsheng Banking Corp, the nation's first listed private lender, may get a hearing for its initial public offer in Hong Kong by the end of this month, taking it one step closer to fulfilling its aim of raising some 30 billion yuan ($4.4 billion) for expansion.

The Hong Kong stock exchange is likely to hold a hearing of the bank's listing application by the end of the month, and if approved, Minsheng's shares may start trading from November, the Hong Kong-based Economic Times reported.

There have been market rumors that the bank was rushing to prepare its third-quarter results, which is scheduled for release on October 21, in order to meet the timeline for the Hong Kong float.

The Shanghai-listed bank, the eighth largest Chinese lender by assets, unveiled the 30-billion yuan fund-raising plan in June. The bank said it expected to issue up to 3.32 billion H shares, or 15 percent of its expanded capital, for the Hong Kong float.

Minsheng's A shares closed at 6.95 yuan Monday, down 0.43 percent from the previous session. The bank's shares have fallen 8.6 percent in the three months since it announced the Hong Kong listing plan.

However, the market was upbeat about the bank's upcoming third quarter results, and analysts said they believed its share price was undervalued from a market expectation of between 8.35 and 10.1 yuan per share.

"The Hong Kong IPO will give the bank's business development plans a boost over the next three years, and we can expect its combined net profit to grow by more than 30 percent during the period," said Cheng Jiaoyi, an analyst with Qilu securities.

The bank's net profit has risen by 22.1 percent in the first half of the year, partly due to a one-time gain through the sale of its holdings in Haitong Securities.

Related readings:  Minsheng Banking plans $3b share sale  Minsheng Bank readies for Hong Kong float  Minsheng net better than peers  IPOs surge amid recent weak debuts and speculation about 'IPO fatigue'

Indeed, Minsheng's rapid credit expansion in the first half has driven down its capital adequacy ratio to 8.48 percent as of June, well below the regulator's bottom line of 10 percent for domestic mid-sized lenders. This could impede the bank's business expansion plans during the rest of the year, analysts said.

According to Cheng, the Hong Kong listing could augment the bank's core capital ratio and capital adequacy ratio to 8.22 percent and 10.13 percent, respectively.

The move would also help the bank prepare for future overseas merger and acquisition opportunities and enhance its brand in the international market, analysts said.

The bank was reportedly planning to increase its holdings in US bank UCBH Holdings to 50 percent from the current 9.6 percent in an effort to firm up its presence abroad.

Li Liming, a Beijing-based press officer of the bank, declined to confirm the report, but said the company would officially announce the progress of its H-share IPO plans through the Shanghai bourse.