Chinese bank to raise $30 billion in world's biggest IPO

Agricultural Bank of China Limited (ABC), one of the big four banks in China, said yesterday that it will come out with an initial public offering (IPO) in Shanghai and Hong Kong in the world's largest IPO.

The funds raised from the Shanghai IPO would be used to raise the bank's capital base, the prospectus said.

ABC, which operates predominately in the countryside did not disclose its issue price yesterday, but media reports have said that the bank would net around $30 billion in what would be the world's largest IPO overtaking the $21.9 billion raised by the Industrial & Commercial Bank of China in 2006.

In October 2006, the largest-ever initial stock offer was made by China's biggest bank, the Industrial & Commercial Bank of China, raising at least $19.1 billion in a dual listing on the Hong Kong and Shanghai stock exchanges, accounting for about 15 per cent of ICBC's total shares. However, due to heavy oversubscription, the bank exercised a over-allotment option, that took the amount raised to $21.9 billion (See: Chinese bank raises $19.1 billion in biggest ever IPO)

The previous record was a $18.4-billion initial stock offer by Japanese mobile phone company NTT DoCoMo in 1998.

Now, the Beijing-based Agricultural Bank of China plans to sell a 15-per cent stake or 22.24 billion A-shares on the Shanghai Stock Exchange and up to 25.41 billion shares on the Hong Kong Stock Exchange, excluding an over-allotment option, according to the prospectus filed with the China Securities Regulatory Commission late yesterday.