China's AgBank IPO Raises $19.2 Billion In Possibly The Biggest IPO Ever

NEW YORK – The Agricultural Bank of China's initial public offering has raised more than $19 billion in what could turn out to be the largest IPO ever.

The last of China's big four state-owned banks to go public, AgBank is selling 25.41 billion shares in Hong Kong and 22.24 billion shares in Shanghai. Based on Tuesday's pricing, the rural lender would raise about $19.23 billion, according to a person familiar with the deal.

The person requested anonymity because details of the IPO have not yet been released.

If underwriters buy up about $2.89 billion more shares to sell to investors, the dual-listing deal could raise $22.12 billion – the most funds ever for an IPO. Industrial and Commercial Bank of China raised $21.9 billion in its October 2006 IPO.

Original forecasts had put AgBank's proceeds at a whopping $30 billion. But investors appeared unprepared to pay that much for shares in a bank whose profitability is viewed as weaker than its urban-focused competitors. Mainland Chinese shares have slumped in recent weeks on worries that the huge IPO may overwhelm demand, pulling prices lower. The global IPO market also has suffered this summer as stock markets tumbled around the world and uncertainty over the economic recovery increased.

In Hong Kong, shares priced for HK$3.20 each (41 cents), the midpoint of the expected range, the person said. In Shanghai, shares priced for 2.68 yuan (40 cents), the top of the expected range, the person added.

Proceeds would total HK$81.31 billion ($10.44 billion) in Hong Kong and 59.58 billion yuan ($8.79 billion) in Shanghai.

The bank said in its Hong Kong prospectus that major foreign investors in the Hong Kong offering include Qatar Investment Authority ($2.8 billion), Kuwait Investment Authority ($800 million), Britain's Standard Chartered Bank ($500 million), Dutch bank Radobank Nederland ($250 million), Australia's Seven Group Holdings Ltd. ($250 million) and Singapore's Temasek Holdings ($200 million).

Comments

[mrJJ]

11:53 AM on 07/07/2010

Set up in 1951 by Mao Zedong to finance rural cooperatives, Agricultural Bank was the first Chinese commercial lender established during Communist rule. It was the last major state bank to go through restructuring, receiving a bailout valued at about $139 billion in 2008.

Agricultural Bank, with 320 million customers and 23,624 outlets in China, made a record 1 trillion yuan of new loans last year, more than the gross domestic product of New Zealand.

EOM

[kdlaiusa]

03:20 AM on 07/07/2010

Good, Hong Kong people should dump all their life savings in the IPO. I'm sure it will be quadrupled 10 times in the first 5 days. Looks like this is another no brainer and everyone's a winner. Yeah!!!!

[bwillrogers]

12:34 AM on 07/07/2010

Billions live in poverty, millions are starving. This is embarrasing.

[mike72]

12:28 AM on 07/07/2010

I could almost see Goldman Sach's dagger revealing ...

10 years ... all it will take is 10 years for Goldman Sach to make the k>ill.

[nixrox04]

10:23 PM on 07/06/2010

And who will bail them out?

[Zhuubaajie]

10:48 PM on 07/06/2010

Is that not obvious? Who else has $2.5 Trillion in ready cash?

[Amalek]

10:17 PM on 07/06/2010

China has seven of the largest IPOs in world history. That is the future, like it or not.

[Amalek]

10:17 PM on 07/06/2010

Seven of the ten largest.

[DCortex]

09:51 PM on 07/06/2010

1st IPO that Goldman Sachs cant touch!

[Amalek]

10:15 PM on 07/06/2010

Don't be silly. Goldman Sachs was the lead underwriter.

[G2Minor]

09:00 PM on 07/06/2010

Is there a reason that the US isn't mentioned amongst the foreign investors?

[Amalek]

10:15 PM on 07/06/2010

They required payment in cash.