China Construction Bank raises record $7.7 billion in Shanghai IPO

China Construction Bank raises record $7.7 billion in Shanghai IPO

Beijing, 19 September China Construction Bank (CCB), the country’s second largest commercial bank, raised a record 58.05 billion yuan ($7.7 billion, Rs30,98,092 crore) in its initial public offering (IPO) in Shanghai, the state media reported today.

This made CCB’s IPO the biggest domestic listing, exceeding the 46.6 billion yuan of the Industrial and Commercial Bank of China (ICBC) in October last year, Shanghai Securities News reported.

The bank, Chinese partner of the American Bank, set the price for its IPO at 6.45 yuan per share, the high end of its price range, due to record subscriptions. The price translated into a price-to-earnings ratio of 32.91 times.

It attracted 2.26 trillion yuan in subscriptions for its yuan-denominated A-share sale, exceeding the 1.9 trillion yuan received by the Bank of Beijing, the country’s largest city commercial bank a week ago.

Analysts said investors chased CCB’s shares because of its good profitability and bright growth prospect.

The bank issued 9 billion shares, less than 3.8% of the expanded capital after the IPO and the proceeds would be used to boost its capital adequacy ratio.

The bank’s earnings per share in the first half of 2007 was 0.15 yuan, compared with 0.12 yuan for the ICBC and Bank of China.

Its non-performing loans ratio stood at 2.95% at the end of June, lower than the 3.29% half a year ago.

The Chinese government encourages its red-chip companies to launch the yuan-denominated A-share IPOs amid efforts to absorb excessive liquidity and help cool down the heated stock market that has more than doubled since the beginning of the year.