ABC Settles on H-share Price Range

Agricultural Bank of China (ABC) has set a share price range after launching a final IPO roadshow in Hong Kong for an IPO aimed at raising US$ 6 billion.

Pre-launch share orders were accepted until the morning of June 24, and most orders were based on a price-to-book ratio of 1.6, which the market has generally accepted based on ABC's bottom line.

ABC set a price range for H-shares at HK$ 2.88 to 3.48 per share, with PB ratios ranging from 1.55 to 1.79.

The bank plans to issue up to a combined 47.6 billion H-shares and Shanghai market A-shares: 25.4 billion H-shares and 22.2 billion A-shares.

ABC has lined up at least 11 cornerstone investors. The Qatar Investment Authority offered to buy US$ 2.8 billion H-shares, while the Kuwait Investment Authority subscribed a US$ 800 million stake, making them the leading investors in terms of subscription value for the Hong Kong IPO.

In addition, Standard Chartered Bank has offered to buy US$ 500 million worth of shares.

Sevens Group and Rabobank Group each plan to buy US$ 250 million worth of ABC H-shares. In addition, China Resources Co. Ltd. and Temasek Holdings have subscribed shares worth US$ 200 million each, and China Travel Service Corp. has offered to invest US$ 150 million.

American agriculture giant Archer Daniels Midland Co., the Hong Kong conglomerate Cheung Kong Holdings Ltd., and United Overseas Bank Ltd. offered to buy shares worth US$ 100 million each.

The lock-up period is 12 months for shares bought by Archer Daniels Midland, the Qatar and Kuwait funds, Sevens, Standard Chartered and Rabobank.

The lock-up period for Cheung Kong, China Resources, China Travel, Temasek, and United Overseas is six months.

ABC is the last of China's four largest state-owned commercial banks to list on the stock exchange. The bank's substantial rural loan business had long been considered a weakness, but China's rapid urbanization has helped improve its profitability in recent years.