CDB Leasing Attracts Three Gorges, China Re to $978 Million IPO

China Development Bank Financial Leasing Co., an arm of the nation’s biggest policy lender, is seeking to raise as much as $978 million in a Hong Kong initial public offering.

The Shenzhen-based lessor agreed to sell as much as 79 percent of the base offering to cornerstone investors including China Reinsurance Group Corp. and China State Shipbuilding Corp., according to terms for the deal obtained by Bloomberg. A single investor, state-owned power generator China Three Gorges Corp., will purchase about 42 percent of the IPO stock, the terms show.

The offering will be Hong Kong’s second major listing from a leasing company this year after BOC Aviation Ltd.’s $1.1 billion IPO last month. First-time share sales in the city have raised $5.6 billion this year, less than half the $14.4 billion of deals priced during the same period in 2015, data compiled by Bloomberg show.

CDB Leasing is offering 3.1 billion new shares at HK$1.90 to HK$2.45 apiece, according to the terms. Guangdong Hengjian Investment Holding Co., funded by the government of the southern Chinese province, agreed to buy 252 million shares, the terms show. 

Government-owned Bank of China Group Investment Ltd. and China Communications Construction Co. will also buy stock in the offering. Cornerstone investors typically agree to hold on to their shares for six months in return for early and guaranteed allocation.

The company aims to price the deal on June 29 U.S. time and start trading July 11. Bank of America Corp., Citic CLSA Capital Markets Ltd., Deutsche Bank AG, HSBC Holdings Plc and UBS Group AG are joint global coordinators of the IPO.

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