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Friday, 27 November 2009
Minsheng shares fall 3pc on debut
China Minsheng Banking Corp fell a disappointing 3 per cent in its Hong Kong debut on Thursday after raising US$3.9 billion in the world’s fifth largest IPO this year, underscoring how sentiment for mainland banks has soured recently.
China Minsheng Banking Corp fell a disappointing 3 per cent in its Hong Kong debut on Thursday after raising US$3.9 billion in the world’s fifth largest IPO this year, underscoring how sentiment for mainland banks has soured recently.
Mainland banking stocks have come under pressure on concerns of potential cash calls as Beijing may hike larger state lenders’ capital adequacy ratios or reserve requirements next year to cool a lending binge.
Recent high IPO volume in Hong Kong – this week alone has seen a flurry of trading debuts – as well as reports of mainland banks discussing fundraising pressured the first day of trading for Minsheng, said Chen Xingyu, an analyst at Phillip Securities Research in Shanghai.
“Considering the number of IPOs in recent weeks, Minsheng would become less attractive to investors in terms of pricing as there are a number of choices in the market,” Chen said.
Minsheng, which attracted investors including billionaire George Soros and Singapore state fund Temasek, was quoted at HK$8.79, compared with an IPO price of HK$9.08, which was around the mid-point of its indicated range.
Hong Kong’s Hang Seng Index fell 1.8 per cent.
Dented by the weak Hong Kong debut, Minsheng’s Shanghai stock fell 5.7 per cent.
But Minsheng’s capital position was seen as relatively sound.
“Minsheng does not have any capital raising plan in three years,” the bank’s chairman Dong Wenbiao told reporters at a Hong Kong listing ceremony on Thursday.
The bank’s capital adequacy ratio is rising to 12 per cent after the IPO from 8.57 per cent as of end-September.
“The proceeds from the IPO would have a positive impact on the bank’s capital adequacy ratio and cash flow over the short term,” said Phillip Securities’ Chen.
Minsheng is mainland’s first non-state lender and the seventh mainland bank to list in Hong Kong. The government or state-owned enterprises are the controlling shareholders for most of mainland’s listed banks, but Minsheng has almost no government holding.
It sold 3.32 billion shares, or 15 per cent of its enlarged share capital, and plans to use the IPO proceeds to strengthen its capital base and grow its business.
Minsheng priced its shares at 1.7 times forecast book value for next year. By comparison, Bank of Communications traded at about 2.17 times of its next year book value, while China Merchants Bank and Citic Bank traded at 2.75 times and 1.66 times, respectively, according to a UBS research report.
The Hong Kong retail tranche was about 159 times subscribed. The popularity triggered the clawback option, raising the retail portion to 20 per cent from 5 per cent of the total offering.
Investors were attracted to Minsheng Bank as a way of tapping mainland’s surging economic growth, and a roster of investors also boosted confidence.
Besides Soros and Temasek, Tiger Fund and China Life Insurance Co committed to buying Minsheng’s shares from the institutional portion of its IPO, sources said earlier.
However, Hopu Investment Management, a highly influential China-focused private equity fund, decided to pull out of plans to invest up to $1 billion at the eleventh hour due to concerns the price was too high, sources said.
Minsheng Bank operates 29 branches and 387 sub-branches domestically, with total assets at end-September of 1.4 trillion yuan (HK$1.59 trillion).
The mid-sized lender forecasts this year net earnings will jump at least 39 per cent to 11 billion yuan ($1.61 billion).
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Minsheng shares fall 3pc on debut
Reuters in Hong Kong
26 November 2009
China Minsheng Banking Corp fell a disappointing 3 per cent in its Hong Kong debut on Thursday after raising US$3.9 billion in the world’s fifth largest IPO this year, underscoring how sentiment for mainland banks has soured recently.
Mainland banking stocks have come under pressure on concerns of potential cash calls as Beijing may hike larger state lenders’ capital adequacy ratios or reserve requirements next year to cool a lending binge.
Recent high IPO volume in Hong Kong – this week alone has seen a flurry of trading debuts – as well as reports of mainland banks discussing fundraising pressured the first day of trading for Minsheng, said Chen Xingyu, an analyst at Phillip Securities Research in Shanghai.
“Considering the number of IPOs in recent weeks, Minsheng would become less attractive to investors in terms of pricing as there are a number of choices in the market,” Chen said.
Minsheng, which attracted investors including billionaire George Soros and Singapore state fund Temasek, was quoted at HK$8.79, compared with an IPO price of HK$9.08, which was around the mid-point of its indicated range.
Hong Kong’s Hang Seng Index fell 1.8 per cent.
Dented by the weak Hong Kong debut, Minsheng’s Shanghai stock fell 5.7 per cent.
But Minsheng’s capital position was seen as relatively sound.
“Minsheng does not have any capital raising plan in three years,” the bank’s chairman Dong Wenbiao told reporters at a Hong Kong listing ceremony on Thursday.
The bank’s capital adequacy ratio is rising to 12 per cent after the IPO from 8.57 per cent as of end-September.
“The proceeds from the IPO would have a positive impact on the bank’s capital adequacy ratio and cash flow over the short term,” said Phillip Securities’ Chen.
Minsheng is mainland’s first non-state lender and the seventh mainland bank to list in Hong Kong. The government or state-owned enterprises are the controlling shareholders for most of mainland’s listed banks, but Minsheng has almost no government holding.
It sold 3.32 billion shares, or 15 per cent of its enlarged share capital, and plans to use the IPO proceeds to strengthen its capital base and grow its business.
Minsheng priced its shares at 1.7 times forecast book value for next year. By comparison, Bank of Communications traded at about 2.17 times of its next year book value, while China Merchants Bank and Citic Bank traded at 2.75 times and 1.66 times, respectively, according to a UBS research report.
The Hong Kong retail tranche was about 159 times subscribed. The popularity triggered the clawback option, raising the retail portion to 20 per cent from 5 per cent of the total offering.
Investors were attracted to Minsheng Bank as a way of tapping mainland’s surging economic growth, and a roster of investors also boosted confidence.
Besides Soros and Temasek, Tiger Fund and China Life Insurance Co committed to buying Minsheng’s shares from the institutional portion of its IPO, sources said earlier.
However, Hopu Investment Management, a highly influential China-focused private equity fund, decided to pull out of plans to invest up to $1 billion at the eleventh hour due to concerns the price was too high, sources said.
Minsheng Bank operates 29 branches and 387 sub-branches domestically, with total assets at end-September of 1.4 trillion yuan (HK$1.59 trillion).
The mid-sized lender forecasts this year net earnings will jump at least 39 per cent to 11 billion yuan ($1.61 billion).
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