Minsheng Bank to pocket $3 billion from Shanghai placement

Minsheng shows hunger for cash again after raising $4 billion in a Hong Kong IPO in 2009, and Sinovel Wind raises $1.4 billion after pricing its Shanghai IPO at the top of the range.

Despite mixed forecasts for China’s stockmarkets in 2011 and ongoing concerns about the government’s monetary tightening policies, fundraising activities in the A-share market are showing signs of heating up.

China Minsheng Bank, the country's seventh-largest lender that is listed in both Shanghai and Hong Kong, will raise Rmb21.5 billion ($3 billion) from an A-share placement to replenish its capital reserve. And two large initial public offerings have received a decent market response.

Minsheng, which raised $4 billion in a Hong Kong IPO in 2009 and had said it had no plans to raise additional funds in the three years following the Hong Kong listing, shows hunger for cash again. The bank has received shareholders’ approval to sell 4.7 billion primary A-shares at Rmb4.57 apiece to seven mainland companies with a three-year lock-up, it announced in a statement to the Shanghai Stock Exchange over the weekend. The buyers include the country's biggest life insurer, China Life Insurance, and six privately owned Chinese firms.

The issuing price of Rmb4.57 translates into a less than 1% discount to Minsheng's closing price of Rmb5.03 last Thursday. Trading in its shares was suspended in both Shanghai and Hong Kong last Friday, pending an announcement in relation to the proposed placement of new A-shares.

Separately, Sinovel Wind, a leading wind turbine maker in China, has raised Rmb9.5 billion ($1.4 billion) after it priced its IPO at Rmb90 per share, making it the most expensive Shanghai IPO in terms of the absolute share price.

The group sold 105 million A-shares at the top of the indicated range between Rmb80 and Rmb90. The final price values the company at 43.7 times its 2009 earnings, while the A-shares of Sinovel’s close competitor Xinjiang Goldwind are currently trading at only 17 times earnings.

However, the offering received a decent market response. The institutional tranche was 9.67 times covered by 49 investors who ordered 203 million shares, compared with the 21 million earmarked for them. The retail tranche, which accounted for 80% of the offering, was 33 times subscribed, the company said in a statement to the Shanghai Stock Exchange on Friday. It didn’t say when the shares will start trading on the exchange. Essence Securities was the bookrunner of the deal.

Several Chinese renewable energy companies have sold new shares since December 2009, but all of them have targeted either the US or Hong Kong bourses. Sinovel's management was quoted by Chinese media as saying the company decided to list in Shanghai because its domestic rivals Goldwind and China Ming Yang Wind Power both had a weak secondary market performance following their overseas listings.

Goldwind raised $917 million in a Hong Kong IPO in October last year after selling its shares at HK$17.98, the top end of its indicated price range. The share price increased on the first day, but lost all the gains and has traded substantially below the IPO price ever since.

Ming Yang raised $350 million after selling 25 million American depositary shares at $14 each in its US IPO, also in October last year. Its shares fell below the IPO price in its debut on the New York Stock Exchange and the downside trend continued in the following months.

Meanwhile, China Hainan Rubber Industry soared 84% in its trading debut in Shanghai last Friday after it reaped Rmb4.7 billion ($709 million) from an IPO in the city. A leading Chinese rubber producer based in the country’s southern Hainan province, the company sold 786 million shares last month at Rmb5.99 each. The final price was set at the top end of an indicated range of Rmb5.50 to Rmb5.99.

Chinese companies may raise Rmb400 billion ($61 billion) from IPOs in the domestic markets this year, PricewaterhouseCoopers (PwC) has predicted.

¬ Haymarket Media Limited. All rights reserved.