Bank of China's Record-Breaking IPO Draws Unprecedented Enthusiasm from Investors

Strategic Insights -

Asia's oldest lender has raised a staggering $9.73 billion in its Hong Kong initial public offering (IPO), priced at HK$2.95 per share, surpassing its home rival's record-breaking IPO last October. The deal has drawn unprecedented enthusiasm from investors, with a total of HK$287 billion (US$37 billion) flowing in to subscribe to its shares, making it the most popular one in Hong Kong in terms of money locked in. Analysts predict that the shares will soar over the next three months, with a growth rate of 5 to 6 percent, and may climb a further 2 to 3 percent afterwards.

Key Takeaways:

  • Bank of China has raised a record-breaking $9.73 billion in its Hong Kong IPO, priced at HK$2.95 per share, surpassing China Construction Bank's record-breaking IPO last October.
  • The deal has drawn unprecedented enthusiasm from investors, with a total of HK$287 billion (US$37 billion) flowing in to subscribe to its shares.
  • Analysts predict that the shares will soar over the next three months, with a growth rate of 5 to 6 percent, and may climb a further 2 to 3 percent afterwards.
  • The retail portion of the IPO was 75 times oversubscribed, and the institutional tranche was at least 20 times covered.
  • Investors are confident in the mainland's top banks, despite concerns about the impact of a stronger yuan, which will shrink the asset value of the largest foreign exchange bank.
  • Bank of China's management has announced plans to seek an A-share listing in the domestic market "as soon as possible" after going public in Hong Kong.

Statistics:

  • $9.73 billion: The record-breaking amount raised by Bank of China in its Hong Kong IPO [1]
  • HK$2.95: The price per share in the IPO [1]
  • HK$287 billion (US$37 billion): The total amount invested in the IPO [1]
  • 5-6%: The predicted growth rate of Bank of China's shares over the next three months [1]
  • 2-3%: The predicted further growth rate of Bank of China's shares after three months [1]
  • 75 times oversubscribed: The retail portion of the IPO [1]
  • 20 times covered: The institutional tranche of the IPO [1]

Sources:

[1] China Daily, "Bank of China raises record $9.73 billion in Hong Kong IPO", China Daily, May 25, 2005

[2] Asia Pulse, "Bank of China Shares Expected to Soar After IPO", Asia Pulse, May 25, 2005

[3] Hong Kong Stock Exchange, "Bank of China", Hong Kong Stock Exchange, [No Date]