Life of Guangzhou - ICBC Mulls Simultaneous Dual Listing

Industrial and Commercial Bank of China (ICBC), the mainland's biggest lender, is poised to become the first company to list simultaneously in Hong Kong and Shanghai when it raises up to US billion later this year, sources familiar with the matter said yesterday.

ICBC, in line to be the third of China's "Big Four" State banks to go public, previously planned to follow the path recently taken by Bank of China, which raised US.2 billion in Hong Kong and 20 billion yuan (US.5 billion) in a Shanghai listing later.

But the sources said ICBC, under pressure from Beijing, is now mulling a simultaneous dual listing, which has resulted in a delay in the IPO's expected timetable, although the deal is still on track to be completed by the year-end. Originally ICBC had been expected to submit a Hong Kong listing application in June.

"That's why ICBC hasn't filed a (Hong Kong) listing application yet," said one of the sources.

The size of the domestic portion has yet to be decided, sources said.

A regulatory source said ICBC's simultaneous listing proposal had been submitted to China's cabinet, the State Council, which is expected to vote on the plan soon.

The mainland scrapped its earlier aim of simultaneous dual listings last year both for Shenhua Energy and Bank of Communications due to weak domestic markets, which also resulted in a year-long hiatus for all domestic IPOs.

But with Bank of China easily raising 20 billion yuan in the mainland's biggest IPO to date only a month after its Hong Kong listing became the world's fourth-largest mainland investment bankers believe the time is ripe for such a deal.

The mainland is looking to bolster its domestic market with high quality listings after the biggest mainland companies for years sold their shares abroad, mostly in Hong Kong.

Completing such a transaction, however, is seen as complicated, especially as the mainland's yuan currency is not freely convertible. Also, such a deal requires two sets of investment banks, adding to the execution risk.

Crowded pipeline

While Bank of China's Hong Kong IPO was much larger than its Shanghai sale, some market watchers and regulators said ICBC's deal could be split evenly.

"Bank of China's A-share offering attracted investor demand of about 700 billion to 800 billion yuan (US.5 billion to US0 billion). Certainly there's strong support for a bigger domestic tranche," said one Chinese investment banker.

Others warned that flooding the Shanghai bourse with new shares could hamper China's market rebound, meaning Hong Kong's share in the deal would be larger.

While the mainland only last month resumed domestic IPOs, the deal pipeline looks crowded for the second half of the year, with Hong Kong-listed Air China planning an 8 billion yuan (US billion) share sale and Daqin Railway looking to raise over 14 billion yuan (US.75 billion).

"The CSRC (China Securities Regulatory Commission) should have a clearer mind on this. You can't have 50-100 billion yuan (US.25-12.5 billion) deals overnight. It takes time for the system to develop and the investors to mature," said a Hong Kong-based banking veteran.