Following the successful listing of Agricultural Bank of China in Hong Kong and Shanghai four months ago, another Chinese bank is about to join the competition for international investors. Chongqing Rural Commercial Bank (CRCB), which kicks off the institutional bookbuilding today, will be the ninth Chinese bank to go public in Hong Kong, but the first among the country’s city commercial banks, offering investors exposure to a different part of China’s financial markets.
While significantly smaller than the Big Four state-owned banks and the mid-cap national banks listed in Hong Kong, CRCB’s positioning as a market leader in one of China’s fastest growing regions, with key metrics like asset quality, fee income and cost efficiency all coming from a low base, makes it a lender poised for significant growth and improvement, analysts argue. As of the end of June, it had total assets of $39 billion.
CRCB is seeking to raise between HK$9 billion and HK$12 billion ($1.2 billion to $1.5 billion) through an initial public offering arranged by joint bookrunners Morgan Stanley and Nomura. The trading debut on the Hong Kong main board is scheduled for December 16.
The listing comes as global equity markets have become increasingly volatile amid concerns about the lingering sovereign debt crisis in Europe, monetary policy tightening in China and the escalation of hostilities on the Korean peninsula. The change in sentiment has led to a reduction in investor appetite for risk and prompted two Hong Kong listing candidates to call off their IPO plans last week. But fund managers still have quite a lot of cash to put to work and bankers believe they will still be open to invest in market newcomers – only on a more selective basis.
Reflecting that, at least two other companies have also decided to launch their respective Hong Kong IPOs today. Huaneng Renewables, the wind-power unit of one of China’s largest state-owned power producers, China Huaneng Group, is getting on the road with the aim of raising between $1 billion and $1.3 billion with the help of CICC, Goldman Sachs, Macquarie and Morgan Stanley.