Agricultural Bank of China today started a share offer worth a world-record US$23.2 billion (Dh85bn) as the government strives to develop depressed regions in the rural lender's heartland. AgBank, the last of China's "big four" state banks to list, plans to float its shares in Hong Kong and Shanghai next month with the monster IPO on track to overtake a previous record of US$22 billion set by Industrial and Commercial Bank of China in 2006.
The initial public offering has already won bedrock support from heavyweight investors - including Qatar's sovereign wealth fund, British bank Standard Chartered and US food giant Archer Daniels Midland. Today, small-time retail investors had their first chance to grab a piece of the action and queues were building outside bank branches in Hong Kong where the AgBank prospectus was being handed out.
"I think it will be a pretty good investment - there is good demand for this stock," Warren Ng, 24, said as he grabbed a weighty prospectus at HSBC's headquarters in the city's financial district. "I've already made up my mind. I'm going to put some money in it." But pensioner S S Fung said he wasn't so sure about the massive share sale, especially after his investment in AgBank's rival mainland lenders fell flat.
"I think I'll take a little of this one, but this is not a good time in the market," he said. Hong Kong's South China Morning Post also reported that investors in the football-mad former British colony may be distracted by the World Cup. "The IPO has come at a wrong time as market sentiment is not good while the World Cup is going on," Christopher Cheung, chairman of Hong Kong's Christfund Securities, was quoted as saying.
"[Some investors] think they could earn more money from soccer betting than the IPO." AgBank chairman Xiang Junbo said yesterday that his company had worked hard to cut its bad-debt load, a major concern for all of China's big banks after a state-sanctioned lending binge during the global financial crunch. And the rural lender said it was poised to capitalise on Chinese government efforts to boost economic growth in the country's centre and west, which have missed out on the export-driven boom enjoyed by coastal regions.
"The county area business will be one of our key profit drivers," Xiang told a news conference in Hong Kong. "(AgBank) is well positioned to capitalise on China's next wave of growth." * AFP