China Everbright Bank will make its initial public offering in Hong Kong on the 20th of December. This is the third time the bank attempts to offer H-shares.
Two failed attempts at an IPO in Hong Kong and it still hasn't given up. China Everbright Bank's trying again, keen to prove that the third time's a charm.
China Everbright Bank called off both its previous attempts at an IPO, in 2011 and 2012, due to volatile markets. And while it once had visions of raising more than six billion U.S. dollars, the bank has significantly scaled back how much it can expect from investors in this third attempt.
Mizuho's Jim Antos says after all that's happened, Everbright's IPO is going to be a tough sell.
"We have a lot of small banks now, mid-sized banks now listing in the last couple of months, and it's not too surprising the shares don't trade very well after the listing, because actually, we're full up already. So this might be successful, it might not. But it doesn't look too hot," Jim Antos, Head of Banking Research of Mizuho Securities, says.
In an unexpected turn of events, JP Morgan Chase last month pulled out as adviser to the deal.
But that didn't keep Everbright from securing initial commitments, reports I-F-R. Of the one-point-four billion dollars in pledges, China Shipping reportedly made the largest commitment at 800 million US dollars.
Everbright would be the third Chinese bank to list in Hong Kong in the past month, as lenders race to meet stricter capital requirements on the Mainland. It’s planning to list on December 20th, eight days after China Cinda Asset Management goes public with its 2.5 billion dollar IPO. The timing couldn't be more ominous, says Antos.
"A year ago Cinda invited Standard Chartered and UBS to invest as long-term investors so they've had a year to do due diligence in a sense that gives a good housekeeping seal of approval. In the case of China Everbright Bank you don't have any of these things. You don't have these positive characteristics. And they may have cornerstone investors, but for sure it’s not Och-Ziff," Antos says.
The one thing going for Everbright? Valuations. Some say with a genuine discount on Everbright's A-shares in Shanghai, its H-shares in Hong Kong look like a big bargain.
Source: CCTV
