China's 1st city-bank IPO sell at top end of range - ResearchInChina
Date:2007-07-17
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THE Bank of Nanjing (stock code: 601009) and the Bank of Ningbo (stock code: 002142) raised a combined 11.07 billion yuan (US$1.46 billion) as China's first two city commercial banks to go public.
Both set their share prices at the top end of the range as a result of oversubscription.
The Bank of Nanjing put its initial public offering price at 11 yuan per share while its Ningbo counterpart set its IPO price at 9.2 yuan a share, the lenders said yesterday.
The Nanjing bank raised 6.93 billion yuan in the share sale, while the Ningbo lender collected 4.14 billion yuan.
The two banks announced their IPO price ranges on Wednesday. The Bank of Nanjing was seeking between 9.8 yuan and 11 yuan, and the Bank of Ningbo eight yuan to 9.2 yuan.
The Bank of Nanjing, partly owned by BNP Paribas and based in the capital of east China's Jiangsu Province, will sell 630 million yuan-backed A shares in Shanghai.
The Bank of Ningbo, which has OCBC Bank as one of its shareholders and is based in Zhejiang Province, is set to sell 450 million shares, or 18 percent of its total capitalization.
Shares in the Bank of Nanjing were oversubscribed 177 times by retail investors while the Bank of Ningbo was oversubscribed 228 times.
"It's natural to see mounting oversubscription as investors prefer bidding on new shares for almost zero risk," said Qiu Zhicheng, a Haitong Securities Co analyst.
Even so, he said shares of the Bank of Nanjing are overpriced while those of the Bank of Ningbo are within the upper limit of estimates.
Qiu said Bank of Nanjing shares are expected to top 11 yuan in six months while the Bank of Ningbo should fetch 13.2 yuan.
City banks in Chongqing, Hangzhou and Shenzhen have also expressed an interest in pursuing stock market listings.
Major Chinese state-owned and joint-stock banks have already gone public, paving the way for qualified city commercial banks to take a similar path.
Terence Lau, an Ernst & Young partner, said city commercial banks will use IPOs as a first option in seeking capital and the cheapest way to raise money.
China's 114 city commercial banks are under pressure to expand from their hometown headquarters.
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