Minsheng bank names bookrunner line-up for IPO

The Shanghai-listed lender mandates BOCI, CICC and Macquarie to arrange its upcoming Hong Kong listing alongside UBS.

China Minsheng Banking Corporation has mandated three bookrunners for its planned initial public offering in Hong Kong alongside UBS, which was earlier named global coordinator and lead bookrunner, sources said yesterday. The move confirms that preparations for a Hong Kong listing are now well underway and that the Shanghai-based lender is pushing ahead with a plan to debut here before the end of this year.

Earlier this week, Minsheng's existing shareholders voted for the plan at a shareholders' meeting.

Sources said BOC International, China International Capital Corp and Macquarie have been appointed bookrunners for the offering together with UBS. The mandates had been coveted as the deal promises to be one of the largest IPOs in Hong Kong this year and, while the selection of BOCI and CICC is difficult to argue with, given their China backing, the decision to name Macquarie alongside them is more surprising. The Australian investment bank started beefing up its capital markets capabilities in Asia only three years ago and doesn't have the experience of doing any of the other Chinese bank IPOs in Hong Kong. However, the bank has been involved with a number of Chinese IPOs in Hong Kong over the past 18 months, including the two large railway sector deals last year, which were both dual A- and H-share listings.

Minsheng is already listed in Shanghai and is therefore not looking for a simultaneous dual listing, but Macquarie's experience of having done these types of transactions may still be useful. Observers also noted that Macquarie has a strong distribution platform.

Minsheng has said that it intends to sell 15% of its share capital in Hong Kong which, based on its current market capitalisation of $22 billion, would suggest a deal size of $3.3 billion, before applying any IPO discount. However, the final size will depend on how the A-share price fares between now and launch and, of course, on the market conditions at the time.

The stock has been gaining sharply since the beginning of this year on the back of soaring loan growth and as of yesterday was up 96%. Investors also treat the country's banks as proxies for an anticipated revival of economic growth in China.

However, Minsheng does need additional capital as its capital adequacy ratio fell below the required 10% as of the end of December (to 9.2%). According to media reports, Minsheng's chairman, Dong Wenbiao, has said that the bank needs Rmb20 billion ($2.9 billion) to boost its core capital ratio above 9%.

The bank was founded in 1996 as the first lender in China to be privately controlled. It listed in Shanghai in December 2000. As of June 30, 2008 it had total assets of approximately $155 billion.

Minsheng made a couple of attempts to list in Hong Kong in 2004 and 2005, but the plans were called off, first due to a legal issue and the second time because of difficult market conditions.

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