China’s AgBank sets floor price for listing
Agricultural Bank of China (AgBank) is understood to have set a floor price for the Hong Kong portion of its $23bn (£15.4bn) stock market listing with key investors agreeing to buy $5.45bn of the shares.
AgBank vice-president Pan Gongsheng was quoted as saying the Hong Kong offer will not be lower than HK$2.80 a share. That would represent a price-to-book multiple of 1.7 times, the report said. A valuation at that level would be slightly higher than the 1.5-1.6 times book the market was expecting.
The HK$2.80 per share floor price means AgBank plans to raise a minimum of $9.14bn on the Hong Kong Stock Exchange.
Pan’s comments come as the bank and its underwriters are finalising the price range for its Hong Kong and Shanghai offering.
Like any initial public offering (IPO) entrenched in an investor roadshow, the top executives push for the highest possible valuation, while investors decide at what level they are comfortable investing.
AgBank originally hoped to raise up to $30bn through its IPO but scaled back expectations amid a 20 per cent drop in China’s stock market in the past few months. The news on China’s yuan policy, however, has given a boost to China’s stock market, helping sentiment around AgBank.
AgBank, the last of China’s four big state banks to go public, is selling a 15 per cent stake in a dual listing in Hong Kong and Shanghai, excluding a greenshoe option, as it looks to replenish its capital and drive growth. As the IPO heads into its final stretch, the bank’s ability to raise the $23bn appears to be getting further from its reach. Just over half of the total offering will be on the Hong Kong Exchange.