March 13 (Bloomberg) -- China Everbright Bank Co. may seek to raise more than $2 billion from a share sale in Hong Kong after its board renewed approval for an offering, two people with direct knowledge of the matter said.
While the size of the offering hasn’t been set, it will probably be less than the 12 billion shares that the board authorized, the people said, asking not to be named because the information is private. It may be the biggest first-time share sale in the city since People’s Insurance Company (Group) of China’s $3.6 billion offer in November.
China Everbright had planned to raise as much as $6 billion from the sale, before scaling it back to about $1.7 billion and then delaying the offering in August, citing sluggish capital markets and low valuations. Shares in nine Chinese banks traded in Hong Kong have gained an average 2.2 percent this year, outpacing a 0.3 percent increase in the Hang Seng Index.
“Market sentiment has improved from last year’s,” Ronald Wan, a Hong Kong-based managing director at China Merchants Securities Co., said by telephone today. “China Everbright Bank has higher chances to complete its listing.”
The offer will take place within 18 months, with the exact timing to be determined “according to the state of global and Chinese capital markets,” the Beijing-based lender, ranked No. 11 in China by market value, said in a statement to the Shanghai stock exchange yesterday.
The bank, which has gained 3.6 percent this year in Shanghai trading, joins China Galaxy Securities Co., a brokerage backed by China’s sovereign wealth fund, in planning to sell shares in Hong Kong.
Companies raised $14.6 billion through IPOs last year in China, down 64 percent from 2011, data compiled by Bloomberg show. Hong Kong initial sales slid by a similar magnitude, to $7.9 billion, the data show.
Nine Chinese lenders traded on the Hong Kong exchange may report average profit growth of 17 percent for 2012, Hong Kong-based analysts led by May Yan at Barclays Plc said in a Feb. 27 research note. Chinese banks are scheduled to publish full-year earnings later this month.
Global investors may demonstrate a more positive attitude toward Chinese companies in 2013, Fang Fang, JPMorgan Chase & Co.’s chief executive officer for investment banking in the country, said March 6.
China Everbright will use the proceeds of the sale to “bolster its core capital, raise the bank’s capital adequacy ratio and strengthen its ability to weather risks,” it said in the statement. A Hong Kong listing would also help it improve profitability and support the “healthy expansion of its various businesses,” it said.
China Everbright shares declined 1.9 percent to 3.16 yuan in Shanghai at the mid-day trading break.
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