Minsheng Bank raises $3.89 billion in largest Asian IPO this year

Minsheng Banking Corp has fixed the price of its initial public offering just above the mid-point of the range for a total deal size of HK$30.15 billion ($3.89 billion). This makes it the largest IPO in both Hong Kong and Asia so far this year, ahead of Metallurgical Corp of China's $2.35 billion H-share offering in September and Malaysian mobile operator Maxis's $3.3 billion IPO earlier this month.

According to sources, Minsheng attracted $33 billion to $34 billion of demand from institutions, excluding cornerstones, and another $32 billion from retail investors. The interest was likely boosted by the fact that Minsheng's Shanghai-listed A-shares gained during the marketing period, as did most of the other Chinese banks listed in Hong Kong. As a result, Minsheng's attractiveness increased.

Minsheng's new H-shares, which will start trading in Hong Kong on November 26, were priced at HK$9.08 after being offered in a range between HK$8.50 and HK$9.50. This puts it at a discount of roughly 5.6% versus its A-shares, which closed at Rmb8.49 yesterday. The H-share IPO price translates into Rmb8 per share.

But Minsheng isn't the only listing candidate to have attracted interest over the past week, Sany Heavy Equipment International, was able to price its IPO at the top of the range for a total deal size of HK$2.4 billion ($309 million). According to sources, the retail tranche was 235 times subscribed, which triggered a full clawback that increased this portion of the deal to 50% from 10% initially.

The remaining $155 million, which will go to institutional investors, was more than 50 times covered, the sources said. Sany is a manufacturer of coal mining equipment and ranks as China's leading maker of roadheaders, which are machines used to create tunnels. The company's key competitive edge is that it is able to manufacture these roadheaders at a level of quality that allows it to compete with international players, but at a significantly lower price. It was brought to market by HSBC and Standard Chartered.

Minsheng and Sany benefitted from the improvement in the IPO market since the end of October, which was further emphasised by property developer Longfor Properties' strong debut yesterday; the share price gained 13.3% versus the IPO price. This bodes well for the numerous companies that are lining up for an IPO in the final few weeks of the year in the hope of capturing the inflow of capital from fund managers that still need to put money to work.

Minsheng sold 3.32 billion new shares, or 15% of the company. The retail tranche was initially set at 5%, but a full clawback followed after the tranche was about 156 times covered. Thanks to a waiver, the retail tranche was limited at 20% of the total deal, however.

The bank is privately controlled and, like other Chinese lenders, viewed as a proxy for the Chinese growth story.

UBS was the sole global coordinator for the Minsheng IPO, with BOC International, China International Capital Corp (CICC), Macquarie and small China-based securities firm Hai Tong joining it as bookrunners.