Chinese Bank unveils world’s `biggest` IPO: Report

The Agricultural Bank of China (ABC) announced huge dual listing in Shanghai and Hong Kong, which could be world`s largest-ever IPO, says a media report.

Updated: Jun 05, 2010, 13:51 PM IST

Beijing: The Agricultural Bank of China
(ABC) announced its huge dual listing in Shanghai and Hong
Kong, which could be the world`s largest-ever initial public
offering, says a media report.

ABC, the biggest bank in China by customers, plans to
sell as many as 22.24 billion A shares in its IPO in Shanghai
and another 25.4 billion shares in Hong Kong.

The Beijing-based bank didn`t disclose its issue price
yesterday, but earlier media reports indicated that it could
net USD 30 billion to rank as the biggest IPO in the world,
surpassing the USD 22 billion sale by the Industrial and
Commercial Bank of China in 2006, the `Shanghai Daily`
reported today.

ABC is the last among China`s big four state-owned banks
to follow the three-step reform -- clean-up of balance sheet,
attracting foreign investors and going public. Its rivals,
ICBC, the Bank of China and China Construction Bank, are all
dual-listed in Shanghai and Hong Kong.

ABC`s Shanghai shares would account for 7 per cent of its
enlarged capital, while its Hong Kong shares would account for
8 per cent.

Also yesterday, Rabobank Groep NV, the world`s biggest
agricultural lender, said it will start a strategic
partnership with ABC in wholesale banking, rural finance,
asset management and leasing, as well tapping joint
business opportunities.

Although ABC, with most of its business in the country`s
rural areas, is less profitable than its state-owned rivals,
Chairman Xiang Junbo is confident that investors will eye its
350 million customers as the central government aims to cut
the gap between affluent cities and rural areas.

Liao Qiang, a Beijing-based analyst at Standard & Poor`s,
said ABC`s rural operations are not profitable yet, but he has
"no doubt" that it will eventually become a stable growth
engine that can`t be easily matched by competitors.

Xiang, previously the deputy governor of China`s central
bank, still has to persuade investors of ABC`s prospects
against concerns of a double-dip recession in the global
economy amid the Greece debt crisis as well as worries of a
domestic stock market slide and a correction in the housing
market.

"The timing isn`t so good for the Agricultural Bank. Most
of my investment colleagues are expecting the bank to give a
reasonable price," said an investment manager, who declined to
be named, the Daily reported.

PTI