Shanghai Pudong Development Bank to Raise at Least HK$10 Billion in Initial Public Offering

Shanghai Pudong Development Bank, China's second-largest domestically listed lender, is planning to raise at least HK$10 billion from an initial public offering in Hong Kong, as part of a broader strategy to expand its presence in the city's financial markets. The bank, which has a 4.2% stake held by Citigroup, aims to sell 700 million A shares in a separate offering, raising 9.5 billion yuan at the current share price. This move is seen as a crucial step in the bank's plans to list its H shares, which would provide it with additional capital to fund expansion.

Key Takeaways:

• The bank plans to raise at least HK$10 billion from an initial public offering in Hong Kong, with 700 million A shares to be sold at 13.58 yuan per share.
• Citigroup will increase its stake in the bank to 19.9% after the sale, arranged by China Galaxy Securities and Shenyin & Wanguo Securities.
• The money raised will be used to build the bank's capital base and fund expansion, including its plans to list its H shares.
• Shanghai Pudong Development Bank's A shares have risen 39% this year, with a 16 times price-to-earnings ratio.
• The bank's non-performing loan ratio fell to 1.89% from 1.97% at the end of last year.
• China's financial institutions have become a favourite among investors seeking to bet on the mainland's growing economy and rising incomes.
• Shanghai Pudong Development Bank, which operates 366 branches, expects earnings to rise 25% this year and loans to grow 18%.
• The bank has raised 2.6 billion yuan in July through the sale of 10-year subordinated bonds and 9.5 billion yuan from the planned A-share offering.

Statistics:

• HK$10 billion: minimum amount to be raised from the initial public offering.
• 700 million: number of A shares to be sold.
• 13.58 yuan: current share price.
• 19.9%: new stake held by Citigroup after the sale.
• 39%: increase in A-share price this year.
• 16 times: price-to-earnings ratio of the bank's shares.
• 1.89%: new non-performing loan ratio.
• 2.6 billion yuan: amount raised from the sale of 10-year subordinated bonds in July.
• 9.5 billion yuan: amount to be raised from the planned A-share offering.
• 25%: expected increase in earnings this year.
• 18%: expected growth in loans this year.
• 443 billion yuan: total lending as of September 30, up 17% from last year.
• 21.5 billion yuan: revenues at the end of last year, up 28% from the previous year.

Sources:

• Market sources.
• Shanghai Pudong Development Bank.
• Citigroup.
• China Galaxy Securities.
• Shenyin & Wanguo Securities.
• ABN Amro analyst Simon Ho.
• Shanghai Pudong Development Bank reports.
• Industrial and Commercial Bank of China reports.
• Bank of China reports.
• China Merchants Bank reports.