UPDATE: Li Ka-Shing, Lee Shau-Kee Each To Invest HK$1 Billion In AgBank IPO - Sources
June 15 2010 - 6:31AM
Dow Jones News
Hong Kong tycoons Li Ka-shing and Lee Shau-kee have signed on as
cornerstone investors in the Hong Kong portion of Agricultural Bank
of China Ltd.'s initial public offering, with each subscribing to
HK$1 billion (US$129 million) worth of shares in the lender, people
familiar with the situation said Tuesday.
The investments by Li, chairman of developer Cheung Kong
(Holdings) Ltd. (0001.HK), and Lee, chairman of Henderson Land
Development Co. (0012.HK), in China's third-biggest bank are
subject to a one-year lock-up period, according to the people, who
declined to be named.
Hong Kong public offerings are often announced with
subscriptions by cornerstone investors as a way to boost investor
interest and the city's billionaires are often leading candidates
for such investments, as are overseas sovereign-wealth funds.
Cheung Kong couldn't immediately be reached for comment.
Henderson Land declined to comment.
The people said AgBank plans to sign up more cornerstone
investors in the IPO in Hong Kong and Shanghai, which could become
the world's largest by raising as much as US$28 billion, in coming
days. The potential investors are based in the Middle East, Europe,
Australia, and Japan, they said.
Singapore state investment company Temasek Holdings, Middle
Eastern sovereign-wealth funds Qatar Investment Authority and
Kuwait Investment Authority have agreed in principle to become
cornerstone investors in the IPO, other people familiar with the
situation told Dow Jones Newswires over the weekend.
Temasek will invest around US$200 million, one of those people
said Tuesday, adding a final decision on the investment is expected
some time this week.
To ensure the success of the IPO, AgBank is in talks to lock in
cornerstone investors for around 30% to 40% of the entire offering,
people familiar with the situation said earlier.
Dutch financial services firm Rabobank, which has agreed to form
a strategic partnership with AgBank, would also be a "logical"
cornerstone investor, a person familiar with the deal said last
week.
Agricultural Bank started the pre-marketing process for the IPO
in Hong Kong and Shanghai on Monday. The lender has slightly
trimmed the US$20 billion-US$30 billion range it had earlier
expected to reap from the deal to US$18.9 billion-US$28
billion.
China's pension fund is the bank's sole strategic investor,
having bought shares before the IPO was launched. In the prospectus
issued last week, AgBank said the pension fund owns a 3.7% stake in
the bank, and China's sovereign-wealth fund and Ministry of Finance
the remainder.
AgBank has long been considered the weakest of China's big banks
with a bigger legacy of bad loans that delayed its coming to
market. But as the last of China's Big Four banks to list, it
offers a rare opportunity for those investors still willing to bet
on China's long-term growth.
AgBank announced a group of 10 investment banks to underwrite
the deal in April, among which China International Capital Corp.
will handle both the A- and H-share portions.
Morgan Stanley (MS), Goldman Sachs Group Inc. (GS), J.P. Morgan
Chase & Co. (JPM), Deutsche Bank AG (DB), Macquarie Group Ltd.
(MQBKY) and Agricultural Bank's wholly owned investment banking
unit, ABC International Holdings Ltd., are the other underwriters
for the H-share offering. Citigroup Inc. (C) is a co-lead manager
on the Hong Kong IPO.
Citic Securities Co. (600030.SH), Guotai Junan Securities Co.
and China Galaxy Securities Co. are the other underwriters for the
A-share offering in China.
With the deal approved in both China and Hong Kong, the bank
will be on track to list in Shanghai on July 15 and in Hong Kong
the following day, people familiar with the situation said
earlier.
Agbank is China's third-biggest bank by assets after Industrial
& Commercial Bank of China Ltd. and China Construction Bank
Corp. ICBC, the country's largest bank by assets, raised $21.9
billion in 2006 in the world's biggest IPO.
-By Yvonne Lee and Joyce Li, Dow Jones Newswires; 852-2802-7002;
yvonne.lee@dowjones.com
(Samuel Holmes in Singapore contributed to this article.)