Rural Chinese bank seeking Hong Kong IPO
(30 May 2016 – Hong Kong) A regional Chinese lender is planning to raise around US$1.5 billion (A$2.08 billion) from an initial public offering (IPO) in Hong Kong, according to sources.
According to reports, Guangzhou Rural Commercial Bank, based in southern China’s Guangdong province, has invited banks to pitch for the IPO in the next couple of weeks, adding that a mandate is expected to be awarded in mid-June.
There is no confirmed date for the public listing.
Guangzhou Rural Commercial Bank would follow two other Chinese lenders, Bank of Tianjin Co. and China Zheshang Bank Co., that listed in Hong Kong earlier this year. The two banks raised a combined US$2.6 billion in their late-March IPOs.
State-owned Guangzhou Rural Commercial Bank is focused on lending to the agricultural industry and providing financial services to farmers as well as small and medium-size enterprises, according to its website.
The bank recorded a net profit of 5 billion yuan (A$1.06 billion) in 2015, down around 9 percent year over year. Its total assets amounted to 583 billion yuan at the end of last year, with a nonperforming-loan ratio of 1.8 percent, higher than the 1.67 percent national average.
The bank’s three biggest shareholders are all wholly owned by the local government.
Hong Kong is still waiting for the IPO of Postal Savings Bank of China, which is expected to raise between US$7 - $8 billion. The lender could file a listing application by the end of July according to people familiar with the deal.
Overall, new bank IPOs have been a hard sell in the market since the second half of last year. A combination of tighter profit margins and increased capital pressure, as well as a rising volume of nonperforming loans have impacted their perceived value. Bank of Tianjin and China Zheshang Bank both priced their IPOs near the bottom end of their indicative price ranges.
Hong Kong’s benchmark Hang Seng Index is down around 7 percent this year, while the Hang Seng China H-Financials Index, which tracks the shares of mainland Chinese banks and other financial institutions, is down about 16 percent, underperforming the broader market.
According to reports, Guangzhou Rural Commercial Bank, based in southern China’s Guangdong province, has invited banks to pitch for the IPO in the next couple of weeks, adding that a mandate is expected to be awarded in mid-June.
There is no confirmed date for the public listing.
Guangzhou Rural Commercial Bank would follow two other Chinese lenders, Bank of Tianjin Co. and China Zheshang Bank Co., that listed in Hong Kong earlier this year. The two banks raised a combined US$2.6 billion in their late-March IPOs.
State-owned Guangzhou Rural Commercial Bank is focused on lending to the agricultural industry and providing financial services to farmers as well as small and medium-size enterprises, according to its website.
The bank recorded a net profit of 5 billion yuan (A$1.06 billion) in 2015, down around 9 percent year over year. Its total assets amounted to 583 billion yuan at the end of last year, with a nonperforming-loan ratio of 1.8 percent, higher than the 1.67 percent national average.
The bank’s three biggest shareholders are all wholly owned by the local government.
Hong Kong is still waiting for the IPO of Postal Savings Bank of China, which is expected to raise between US$7 - $8 billion. The lender could file a listing application by the end of July according to people familiar with the deal.
Overall, new bank IPOs have been a hard sell in the market since the second half of last year. A combination of tighter profit margins and increased capital pressure, as well as a rising volume of nonperforming loans have impacted their perceived value. Bank of Tianjin and China Zheshang Bank both priced their IPOs near the bottom end of their indicative price ranges.
Hong Kong’s benchmark Hang Seng Index is down around 7 percent this year, while the Hang Seng China H-Financials Index, which tracks the shares of mainland Chinese banks and other financial institutions, is down about 16 percent, underperforming the broader market.
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