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Minsheng raises HK$30.1b from public float

(China Daily/Agencies)
Updated: 2009-11-20 08:08

China Minsheng Banking Corp, the nation's first privately owned lender, raised HK$30.1 billion ($3.88 billion)in Hong Kong's biggest public share sale since April 2007, three people familiar with the matter said.

Minsheng sold 3.32 billion new shares, or a 15 percent stake, at HK$9.08 apiece, just above the mid-point of a HK$8.5 to HK$9.5 range, the people said, declining to be identified before an official announcement. The final price values the bank at about 1.77 times its estimated 2010 book value, two of the people said.

Chairman Dong Wenbiao is seeking to plug a shortfall in the bank's capital adequacy ratio, which fell to the second-lowest among the nation's 14 listed lenders in the second quarter and threatens to stunt profit growth.

The planned sale, shelved four years ago because of market conditions, comes as the Hang Seng Finance Index has gained 68 percent this year.

"Minsheng's selling point is its non-government-backed nature with less policy risks," said James Liu, a Shanghai-based analyst at Sinopac Financial Holdings Co. "The proceeds can sustain its expansion over the next two years, but after that it will need another round of fund raising."

International institutions ordered more than $34 billion worth of shares, and the Hong Kong portion of the sale got bids for 159 times the stock on offer, one of the people said.

Minsheng's Hong Kong valuation compares with 3 times book value for the Hong Kong-quoted shares of China Merchants Bank Co and 1.9 times for the Hong Kong shares of China CITIC Bank Co.

Shares of Minsheng gained 0.12 percent to 8.49 yuan ($1.24) in Shanghai yesterday. The stock has doubled this year.

Five cornerstone investors, including the asset management arm of Ping An Insurance (Group) Co and Chinese Estates Holdings Ltd, received $340 million worth of shares in exchange for a commitment not to sell their investments for a few months.

Related readings:  Mainland bank Minsheng launches $3.9b IPO in HK  Minsheng unfazed by UCBH losses  Minsheng seeks $4.07b in Hong Kong: report  Minsheng sees Jan-Sept net profit up 18%

Hopu Investment Management Co, the China-focused fund backed by Temasek Holdings Pte, won't be allocated the amount of shares it ordered because the price the fund offered was below the sale price, two people familiar with the matter said. Hopu didn't want to buy shares above HK$9, one of the people said. Hopu officials declined to comment.

Minsheng's shares will start trading in Hong Kong on Nov 26, making the company the seventh mainland bank to list in Hong Kong. Its six bigger rivals had an average 13.5 percent gain on their debut, according to Royal Bank of Scotland Group Plc (RBS).

"Minsheng has an average business franchise as well as a no-better-than-average risk management track record," Sally Ng and Irene Huang, Hong Kong-based analysts at RBS, wrote in a note this week. "We believe Minsheng shares are unlikely to outperform its H-share bank peers in the medium term." They rate the stock "hold".

Minsheng, founded by 59 private investors including pig-feed tycoon Liu Yonghao, aims to increase profit by at least 40 percent this year to 11 billion yuan after growth slowed to 25 percent in 2008.

The bank's overall capital adequacy ratio stood at 8.48 percent at June 30. The ratio may rise to about 11.6 percent after the Hong Kong offering, Sinopac's Liu estimated.