Bank of China braved volatile equity markets yesterday to raise $9.7bn (£5.2bn) in the biggest initial public offering in six years. It was priced near the top of the previously indicated valuation range and was heavily oversubscribed as investors scrambled to get exposure to China's surging economy.
The issue was the sixth largest IPO ever but that will rise to fourth biggest if, as expected, Bank of China exercises an overallotment option that will expand the deal to $11.1bn.
The largest-ever public fund-raising was the $18.4bn taken by Japanese telecoms company NTT DoCoMo in 1998, followed by Italy's energy group, Enel, which raised $17.4bn in 1999, according to the data group Dealogic.
The share sale of the state-run Bank of China tops the $9.2bn raised in October by the rival China Construction Bank to be the nation's largest. It was also the most heavily subscribed Hong Kong IPO ever despite a recent sell-off in emerging markets. And it was the biggest IPO from a financial services business, with proceeds to be used to build its capital base and expand its business.
The deal values the Beijing-based Bank of China at $92.4bn, ranking it 10th among banks in the world, just ahead of Spain's Santander and just behind Mizuho Financial Group of Japan.
The issue provided a bumper paper profit for Royal Bank of Scotland and other foreign investors who took a 10 per cent stake in the Chinese lender in August. RBS's 5 per cent stake, which cost it $1.6bn, is now worth $4.2bn.
Separately, a group of Saudi investors led by the billionaire Prince Alwaleed bin Talal announced a $2bn bid for a 2.7 per cent stake in the bank.
Industrial and Commercial Bank of China plans an even bigger fundraising this year, worth $12bn, which will again test investors' appetite for Chinese banks. China is listing its big lenders as part of a drive to make them more efficient before the sector is opened up further to foreign competition under Beijing's World Trade Organisation commitments, which must be fully implemented by the end of this year.Reuse content