World biggest IPO could be from Chinese Bank
Filed Under (Business News) by fred on 07-07-2010
Tagged Under : Agricultural Bank of China, Biggest IPO
One of China’s biggest banks is on track to become the largest IPO in history.
Agricultural Bank of China, a lender which boasts more customers than the entire U.S. population, has raised $19.2 billion from investors, according to several news reports. Should the company agree to exercise its option to sell more shares, that number is expected to exceed $22 billion.
“It will, barring extenuating circumstances, be the world’s largest IPO,” said Scott Sweet, senior managing partner of the IPO research firm IPO Boutique.
Pricing for the company’s stock, which will list on exchanges in both Hong Kong and Shanghai, is not expected to be officially announced until Tuesday evening at the earliest.
But if the final figures are anywhere close to current market speculation, Agricultural Bank’s offering would barely edge out fellow lender Industrial and Commercial Bank of China, which set the previous worldwide record of $21.9 billion when it went public in 2006.
Visa currently holds the U.S. record after it raised nearly $18 billion in its market debut in 2008. There is some speculation that General Motors could top that once it eventually goes public again.
Despite concerns about brewing real estate troubles in China, expectations have been for Agricultural Bank to make a splash among investors.
Although the bank will not trade on a U.S. exchange, many on Wall Street are keeping a close eye on the IPO to determine whether China’s economy and stock market are showing any signs of cooling off.
With nearly 24,000 branches and a customer base of approximately 320 million, Agricultural Bank is poised to grow as both the Chinese banking system and domestic consumers become more sophisticated.
Investors will have to wait to see how the broader market responds to the offering however as there is typically a lag between the time Chinese companies price their shares and the first day of trading.
Shares of the company are expected to begin trading July 15 in Shanghai. Hong Kong shares are set to follow a day later.
