Despite the country’s economic uncertainties, China is starting to see large deals coming to its capital markets. Most of the big issuers that have decided to brave the market are banks keen to boost their lending capacity, and infrastructure-related groups with a thirst for working capital – both of which play a key role in ensuring China's growth.
Bank of Beijing, one of the most profitable city commercial lenders in China, said yesterday that it has raised Rmb11.8 billion ($1.9 billion) from a private placement. It is the first time the Beijing-based lender comes to the capital market after its record-breaking Rmb15 billion Shanghai IPO in 2007.
According to data from Dealogic, the deal is the fourth-largest equity capital market (ECM) transaction in Asia (ex-Japan) so far this year. Globally, it is the seventh-largest overall and the third-largest in the finance sector so far this year, behind UniCredito Italiano’s $9.9 billion rights issue and Citi’s $1.93 billion sell-down in Housing Development Finance Corp that were both priced in the first two months.
The Bank of Beijing transaction comes less than two weeks after Bank of Communications (BoCom) announced that it is seeking to raise Rmb56.6 billion ($9 billion) through a private placement, which could be one of the world’s biggest share sales this year.
Bank of Beijing sold 1.1 billion shares to nine different institutional and corporate investors at Rmb10.67 apiece, the lender said in an announcement. The offering price represents a 10% discount to Rmb12.09, which was the 20-day average trading price before the bank's board approved the placement on April 8 last year.
Compared to yesterday’s closing price of Rmb9.74, the offering price represents a premium of 9.5%.
Huatai Auto invested Rmb3.5 billion, Citic Securities Rmb3 billion, Taikang Life Rmb2 billion, State Development and Investment Corp Rmb800 million and China Hi-tech Group bought Rmb500 million worth of shares. Another four investors each invested Rmb500 million. The newly offered shares are subject to a 36-month lock up. Apart from Citic, the other investors are all new shareholders to the bank.
The bank will use the proceeds to replenish its capital reserve. China Securities and Morgan Stanley Huaxin Securities were joint bookrunners, according to a statement to the Shanghai Stock Exchange.
Bank of Beijing, in which ING is a shareholder, listed in Shanghai in 2007 through what is viewed to be the most popular A-share IPO ever. The Rmb15 billion offering attracted as much as Rmb1.9 trillion worth of subscriptions from institutional and retail investors combined. The previous record was set by China COSCO’s IPO, which received Rmb1.6 trillion of orders from investors.
Bank of Beijing, together with its domestic peers Bank of Nanjing and Bank of Ningbo, is the most profitable among the 114 city commercial banks in China.
Separately, Citic Heavy Industries said it plans to sell 685 million A-shares, or 25% of its enlarged share capital, in a Shanghai IPO. The heavy-machinery manufacturer didn't say how much it plans to raise but noted that Rmb4.13 billion of the proceeds will be used to invest in energy-related equipment projects.
The company has hired Citic Securities and Zhong De Securities, a joint venture between Deutsche Bank and Shanxi Securities, to manage the deal.
Last month, China Communications Construction, the country’s biggest port builder, raised Rmb5 billion ($793 million) from a downsized Shanghai IPO.
