China Everbright Bank mandates three bookrunners for HK IPO

China International Capital Corp, Morgan Stanley and UBS bag the mandate to help the bank go public in Hong Kong.

China Everbright Bank, the country’s 11th-largest lender, has mandated China International Capital Corp (CICC), Morgan Stanley and UBS for its planned H-share offering, according to sources.

The bank, which raised Rmb18.9 billion ($2.8 billion) from a Shanghai initial public offering last August, said in February it plans to sell 10.5 billion H-shares in a Hong Kong IPO to replenish its capital reserves. The deal will come with an overallotment option to issue an additional 1.5 billion shares in the event of strong demand, resulting in a total offering of up to 12 billion shares, the bank said in a filing to the Shanghai Stock Exchange (SSE).

Everbright Bank hasn’t confirmed the targeted deal size, but the offering might be one of the world’s largest IPOs this year. Because the lender’s Shanghai-listed share price, which has traded at between Rmb3 and Rmb4 during the past three months, will be taken as a reference when setting the H-share offering price. That suggests the deal might raise around $6 billion to $7 billion.

Everbright Bank’s $2.8 billion Shanghai share sale was China’s second-largest IPO in 2010, following the $20.8 billion deal from Agricultural Bank of China (ABC), which topped the global IPO list.

Banking analysts say the bank could have launched a simultaneous A- and H-share listing last year if it wasn’t for ABC’s record sale, which the Chinese authorities had pinpointed as a top priority to tap the equity markets in 2010, ahead of other Chinese lenders.

CICC’s presence on the list of bookrunners is no surprise after playing the same role on Everbright Bank’s Shanghai IPO. China’s largest home-grown investment bank jointly managed the deal with Shenyin & Wanguo Securities and China Jianyin Investment Securities.

There are a total of nine mainland banks listed in Hong Kong. Bank of Communications was the first to sell shares in Hong Kong when it raised $2.16 billion in 2005. Chongqing Rural Commercial Bank made the most recent new share sale, when it raised $1.35 billion in an IPO in the city last December.

A total of eight mainland banks have shares listed in both Hong Kong and Shanghai. Three of them — ABC, China Citic Bank and ICBC — achieved this through a simultaneous IPO in both markets.

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