Oct. 20 (Bloomberg) -- Industrial & Commercial Bank of China Ltd. raised $19.1 billion in the world's biggest initial public offering after attracting orders equivalent to twice Citigroup Inc.'s market value.

China's biggest bank sold 48.39 billion shares for HK$3.07 (39.4 cents) and the equivalent in Chinese yuan, said two bankers involved in the IPO, who declined to be identified before the official Oct. 23 announcement. The company may sell $2.9 billion more stock once trading begins on Oct. 27.

ICBC raised the maximum amount sought as investors placed orders for more than $500 billion of stock, betting the bank's 18,000 branches and a customer base bigger than Russia's population will be a proxy for China's economic expansion. The IPO represents 14.8 percent of the company's shares and will value the Beijing-based bank at $129 billion.

``The demand's a surprise, given the bank's main attraction is its size,'' said Ambrose Chang, who oversees $1.6 billion of assets as chief investment officer of Daiwa SB Investments HK Ltd. and who ordered ICBC shares. ``It's a benchmark China bank stock and the sale came at the right time.''

The Hang Seng China Enterprises Index of Chinese shares traded in Hong Kong is at the highest level in more than 16 years, with the benchmark Hang Seng Index trading less than 2 percent from an all-time high.

Market Timing

Bank of China Ltd., the nation's second-biggest, began selling stock in an $11.2 billion IPO in May, when the China Enterprises Index fell 2.5 percent, the first monthly decline in 11. Shares of Bank of China have risen 15 percent since then.

ICBC's market value will rise to $131 billion should the over-allotment option be exercised, and may top Mitsubishi UFJ Financial Group's $135 billion if the stock gains once trading begins. That would make ICBC the world's fifth biggest bank.

New York-based Citigroup has a market value of $248 billion.

``ICBC may have an upside of 10 percent on debut so it will be trade at the industry average,'' said Liu Yang, who helps manage $3 billion at Atlantis Asset Management Ltd. in Hong Kong. ``I'll probably sell if it goes above that. Loan growth is boring and management is ordinary. It's not even the best in China, and there's no point comparing it with global lenders.''

China, the world's fastest growing major economy, has been trying to clean up banks saddled with bad debts that peaked at more than 30 percent of all loans in 2000, a legacy of unchecked lending to state companies and lax internal controls.

Book Value

ICBC said will it use the proceeds from the sale to fund expansion. The Ministry of Finance and Central Huijin Investment Co., a state-owned holding company, each own 36.2 percent of the bank after the sale. A Goldman Sachs Group Inc. investor group own a combined 7.4 percent, the bank's share sale document shows.

The sale price represents 2.23 times ICBC's estimated book value for this year. That compares with 2.3 times for Bank of China. China Construction Bank Corp., the nation's fourth biggest, is at 2.6 times, data compiled by Bloomberg show.

``For the past 20 years, the whole economic reform has been quite successful but the banking reform has just started,'' said Shifeng Ke, director of Martin Currie Group's MC China Ltd., the biggest overseas investor in China's domestic stock markets.

State Bailouts

China's three biggest government-owned banks received $60 billion in bailouts since 2003 as part of the industry cleanup. The government also bought hundreds of billions of dollars of bad loans from firms to strengthen their balance sheets.

The country's banking regulator is strengthening oversight of banks, which are trying to improve risk-management systems and root out fraud following scandals and embezzlement cases.

The regulator said it uncovered 480 fraud cases at domestic banks in the first half of this year, about 16 percent fewer than a year earlier.

``I won't fall off my chair if one day one of the banks says $10 billion has gone missing,'' said Hugh Young, who helps manage $25 billion at Aberdeen Asset Management in Singapore and didn't apply for the stock. ``We are conservative investors. We just don't have sufficient comfort level.''

ICBC attracted investors with the biggest branch network in China and 153 million customers, more than the 143 million people who live in Russia. A four-year investment boom has powered annual economic expansion of 10 percent, double the global average, pushing China past the U.K. to become the world's fourth-largest economy.

Fees, Commission

Fee and commission income at ICBC was the highest among the nation's four biggest banks last year, rising to 10.5 billion yuan from 5.6 billion in 2003, according to IPO prospectus.

The bank last year received a $15 billion rescue package that helped it reduce bad loans, and this year sold a stake for $3.78 billion to a group including Goldman's GS Capital Partners V fund, Allianz AG and American Express Co.

Overseas institutional investors ordered about $345 billion of ICBC shares, while Hong Kong individuals ordered $54 billion, the bankers said. Demand from individuals in China exceeded 650 billion yuan, and institutional investors in the country placed 130 billion yuan of orders, the bankers said.

Shares in the Chinese portion of the IPO were priced at 3.11 yuan, the bankers said. The sale, the first simultaneous offering in Hong Kong and Shanghai, eclipses the $13.7 billion that Bank of China raised in offerings in May and July this year.

Merrill Lynch & Co., China International Capital Corp., Credit Suisse Group, Deutsche Bank AG and ICEA Securities handled the global share offering. Underwriters for the domestic sale are China International Capital Corp., Citic Securities Co., Guotai Junan Securities Co. and Shenyin & Wanguo Securities Co.

The following is a table of the 10 largest global IPOs, according to data compiled by Dealogic and Bloomberg. The list excludes rights offerings, domestic sales and tenders. The size is taken from exchange rates at the time of the sale and includes over-allotment options that have been exercised.

Company                       Country        Year      Size
                                                      ($bln)

ICBC                          China          2007      19.1
NTT DoCoMo                    Japan          1998      18.4
Enel SpA                      Italy          1999      17.0
Deutsche Telekom AG           Germany        1996      13.0
Bank of China Ltd.            China          2006      11.2
OAO Rosneft                   Russia         2006      10.6
AT&T Wireless                 U.S.           2000      10.6
Telstra Corp.                 Australia      1997      10.0
China Construction Bank Corp. China          2005      9.2
Kraft Foods Inc.              U.S.           2001      8.7

To contact the reporter on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net;

Last Updated: October 20, 2006 04:02 EDT