Investors swoop on Bank of China IPO
Updated: 2006-05-23 09:01
The flotation of Bank of China, the world's biggest share listing for six
years, is attracting a large amount of demand from retail investors, despite the
recent falls in the Hong Kong stock market.
The bank will price shares in the US$9.8 billion flotation Wednesday. The
shares are expected to be priced at between HK$2.50 and HK$3.00. The pricing
comes after Monday's 2.6 per cent fall in Hong Kong's benchmark Hang Seng index
and a 3.5 per cent drop last week.
The retail order book is set to close today. If it is more than 100 times
oversubscribed, then the retail tranche will be expanded from 5 per cent to 20
per cent of the shares on offer. The total offering of shares could be expanded
to $11.3 billion if there is enough demand. The shares will make their stock
market debut on June 1.
Several recent flotations by Chinese firms have seen massive first-day
trading gains, as institutions, disappointed by their allocations, have snapped
up shares in the aftermarket in the first few days of trading.
Retail investors hope that the Bank of China flotation will be as successful
as the listings of China Construction Bank and Bank of Communications, which
have seen their shares rise about 44 per cent and 97 per cent respectively since
listing last year.
Bank of China, which owns 66 per cent of Hong KongĄ¯s No 2 bank, BOC Hong
Kong, began taking orders from institutional investors on May 11 and has
attracted more than $30 billion in orders. A consortium led by Royal Bank of
Scotland owns 9.6 per cent of Bank of China.
The listing is sponsored by BOC International, Goldman Sachs and UBS. The
investment banks are expected to reap total fees of about $250