China's Harbin Bank Plans $1 Billion Hong Kong IPO
Would Be Fourth Chinese Bank to List There Since November
By YVONNE LEE And PRUDENCE HO
Feb. 19, 2014 1:01 a.m. ET
HONG KONG—China's Harbin Bank plans to seek approval from Hong Kong's securities regulator in early March for a $1 billion initial public offering in April, people with direct knowledge of the deal said Wednesday.
If it gets listing approval from Hong Kong's stock exchange, Harbin Bank—based in the northeastern Chinese city of the same name—would be the fourth Chinese bank to go public in Hong Kong since November. They have been raising money through Hong Kong IPOs to replenish their capital as regulatory requirements tighten and a slowing economy increases bad loans.
ABC International Holdings Ltd., BOC International Holdings Ltd. and China International Capital Corp Ltd. are the lead banks for the IPO, while DBS Bank, CIMB Group and J.P. Morgan Chase JPM +0.58% & Co., are also helping the share sale, the people said. More banks will be added at a later stage, one of the people said.
In December, China Everbright Bank, 601818.SH +2.80% the country's 11th-largest by assets, had a $3 billion IPO that was Hong Kong's biggest of the year. Huishang Bank Corp. 3698.HK 0.00% and Bank of Chongqing raised a total of about $2 billion in November IPOs.
Harbin Bank had been planning a listing in both Hong Kong and Shanghai, but decided to list only in Hong Kong after China closed off IPOs in October 2012, a moratorium that ended only in January. Both Bank of Chongqing and Huishang had also been in the queue for a Shanghai listing when China shut the IPO door.
Harbin Bank will likely face the same challenges while pricing its shares as its peers, some of which have traded below book value since listing in Hong Kong. China doesn't allow its banks to list below book values, but to attract investors the three recently listed banks skirted the rule: They priced their shares above their 2012 historical book values, but below their 2013 expected book values.
Huishang Bank is trading at 0.96 times its expected book value for 2013 and 0.83 its expected book value for 2014, according to Capital IQ.
Harbin Bank's book value isn't available because the company doesn't have to disclose its financial data until its listing.
Another IPO set for the second quarter, though still awaiting listing approval in Hong Kong, is pork producer WH Group, formerly called Shuanghui International Holdings, seeking to raise US$5 billion in April. Also, China Grand Automotive Services Co., in which U.S.-based private-equity firm TPG Capital has a stake, plans to raise US$1 billion.