Sign in Subscribe
Banks (Finance)

Bank of China Plans Record-Breaking IPO Amid Strong Share Market

Strategic Insights

— 2 min read

Bank of China, China's No. 2 lender, is gearing up for a massive initial public offering (IPO) of up to 76.8 billion Hong Kong dollars ($9.9 billion), making it the world's largest in six years. The bank plans to list 25.6 billion shares, representing 10.5% of its enlarged share capital, at between 2.50 Hong Kong dollars and 3.00 Hong Kong dollars apiece on May 11. This move comes as China Construction Bank's shares have surged 52% since they began trading in Hong Kong in November, valuing the company at 2.6 times its 2006 book value.

Key Takeaways:

  • Bank of China plans to raise up to 76.8 billion Hong Kong dollars ($9.9 billion) in its IPO, the world's largest in six years.
  • The bank will list 25.6 billion shares, representing 10.5% of its enlarged share capital, at between 2.50 Hong Kong dollars and 3.00 Hong Kong dollars apiece.
  • The IPO range would be 1.9 times to 2.2 times Bank of China's 2006 book value, making it at least 15% cheaper than rival China Construction Bank.
  • Industrial & Commercial Bank of China, China's largest lender, plans to raise about $10 billion to $12 billion in a Hong Kong IPO as early as September.
  • Bank of China is focusing on expanding lending to individual customers and increasing fee income to counter slower loan growth to companies.
  • Fee income has been growing at an annual rate of 30%, and retail banking at 20%, compared with about 8% to 10% overall loan growth.
  • The lender's non-interest income is expected to grow 9.4 percent this year to 26.4 billion yuan.

Statistics:

  • Bank of China plans to raise up to 76.8 billion Hong Kong dollars ($9.9 billion) in its IPO.
  • The bank will list 25.6 billion shares, representing 10.5% of its enlarged share capital.
  • The IPO range would be 1.9 times to 2.2 times Bank of China's 2006 book value.
  • Bank of China's fee income has been growing at an annual rate of 30%.
  • Bank of China's retail banking has been growing at an annual rate of 20%.
  • Industrial & Commercial Bank of China plans to raise about $10 billion to $12 billion in a Hong Kong IPO.
  • Bank of China's non-interest income is expected to grow 9.4 percent this year to 26.4 billion yuan.

Sources:

  • Bloomberg data
  • BOC International Holdings
  • Goldman Sachs Group
  • UBS
  • BOC International Holdings (April 28 research report)
  • UBS (research report)

Read more