China’s BoCom to raise $8.9 bn in private placement to boost capital

China's fourth-largest bank, Bank of Communications Co (BoCom), yesterday said that it plans to raise 56.6 billion yuan ($8.9 billion) in a private placement as part of China's fifth-largest bank plan to boost capital in order to comply with the banking regulator's tougher capital requirements.

The share sale will be the world's biggest since commodities giant Glencore International raised $9.9 billion in an IPO in May 2011.

The bank's shares were yesterday suspended from trading on both the Shanghai and the Hong Kong Stock Exchange and will resume today after it releases further details of the placement.

Shanghai-based BoCom said it would issue 6.54 billion yuan-denominated A shares at 4.55 yuan ($0.72 cents) each and 5.84 billion Hong Kong dollar-denominated H shares at HK$5.63 ($0.73 cents) each.

HSBC Holdings and China's ministry of finance, BoCom's two largest shareholders, will take part in the private placement. HSBC currently holds 19 per cent stake in BoCom, while China's Ministry of Finance holds 27 per cent.

BoCom will sell 6.54 billion new Shanghai-traded shares to seven investors including the China's National Council for Social Security Fund, auto maker FAW Group and tobacco manufacturer Hongta Group, and 5.56 billion new Hong Kong-traded shares.