Minsheng delays IPO push, waits for BoCom listing
June 8, 2005
China's first private lender, Minsheng Banking Corp, has postponed marketing of a planned US$800 million (HK$6.2 billion) initial public offering, sources close to the deal said Tuesday.
The move came after state-run rival Bank of Communications indicated it would list at a discount to typical valuations in the Chinese banking sector.
Beijing-based Minsheng, which had planned preliminary marketing of the offering this week, told fund managers that their meetings had been cancelled.
“Minsheng would delay its marketing for a week to see how investors respond to BoCom's IPO,'' a source close to the deal said after a meeting of bankers and Minsheng executives Tuesday.
Minsheng now plans to start its marketing on June 13, the sources said.
Shanghai-based BoCom, China's fifth-largest lender, kicked off a formal management roadshow on Monday and will open its order book for retail investors on June 13, with a trading debut expected on June 23.
BoCom, the first Chinese bank to go public in Hong Kong, aims to raise US$1.9 billion by offering 13 percent of its enlarged share capital at 1.3 to 1.8 times its estimated book value at the end of 2005. That indicated valuation is well below Minsheng's Shanghai-listed A shares, which trade at about two times book.
Fund managers expect Minsheng to offer its shares at a lower valuation than BoCom's.
Clive Zhang, chief investment officer at Partners Capital Asset Management, said Minsheng may benefit from a delay, as it could ask for a higher valuation if shares in BoCom climb 20 to 30 percent after their listing on June 23. “The IPO market looks a bit crowded at the moment. If Minsheng holds up its listing, it does good to BoCom as well,'' Zhang said.
Four Chinese companies - top coal miner Shenhua Energy, number-five lender BoCom, leading container line COSCO Holdings and Minsheng - aim to raise more than US$8 billion combined in one month.
Shenhua may sell its shares at the low end of an expected price range, as investors balked at a high valuation for the world's biggest IPO so far this year.
BoCom's US$1.9 billion offering is handled by Goldman Sachs and HSBC, which holds a 19.9 percent stake in the lender. Citigroup, Deutsche Bank and Goldman Sachs, sponsors of Minsheng's deal, declined comment.
Shares in Minsheng fell 1.65 percent to 4.77 yuan on Tuesday.