Guangzhou Rural Bank launches US$1.1 billion Hong Kong IPO
(5 June 2017 – Hong Kong) Guangzhou Rural Commercial Bank (GRCB) launched a Hong Kong initial public offering worth as much as US$1.1 billion (A$1.4 billion).
The bank it seeking capital for potential mergers and acquisitions and to open new branches as it expands its lending and investment businesses.
The deal, which could value China's fifth-largest rural commercial bank by assets at some US$6.7 billion, is relying on cornerstone investors to take up 40 percent of the offering.
Although the bank is heavily depending on cornerstones investments (i.e. those from state-backed enterprises), it comes as China has made it mandatory for mainland cornerstone investors in Hong Kong IPOs to repatriate funds when they sell their shares.
GRCB has secured commitments worth around US$431 million from three investors, including US$195.1 million each from a unit of HNA Group and from Aeon Life Insurance Company Ltd.
Investment firm International Merchants Holdings plans to buy US$40 million worth of shares.
The deal would be the second by a rural commercial bank in Hong Kong in 2017, following the US$446 million listing by Jilin Jiutai Rural Commercial Bank Corp Ltd in January.
Financial firms typically account for the bulk of new listings in the city, but have only comprised 27 percent of IPOs so far in 2017, compared with 60 percent in 2016. Other lenders looking to go public this year include Zhongyuan Bank and Bank of Gansu, which plan to raise about US$1 billion and US$700 million respectively.
GRCB's IPO is set to be priced later this month, with its debut on the Hong Kong stock exchange expected on 20 June.
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