Zhe­shang Bank to de­lay test­ing $1b IPO in­ter­est

The Pak Banker - - COMPANIES/BOSS -

China Zhe­shang Bank Co post­poned gaug­ing de­mand for a $1 bil­lion Hong Kong ini­tial pub­lic of­fer­ing, af­ter stock buy­ers re­ported dif­fi­culty trans­fer­ring money out of main­land China, peo­ple fa­mil­iar with the mat­ter said.

Po­ten­tial cor­ner­stone in­vestors from China told deal ar­rangers they couldn't get timely reg­u­la­tory ap­proval to send money across the bor­der, ac­cord­ing to the peo­ple, who asked not to be iden­ti­fied be­cause the in­for­ma­tion is pri­vate. The len­der, based in the east­ern Chi­nese city of Hangzhou, had orig­i­nally planned to start so­called pre-mar­ket­ing of the deal on Mon­day, the peo­ple said.

Any curbs on money out­flows could hurt the Hong Kong mar­ket, where the amount raised from first-time share sales rose 13 per­cent last year to $33.9 bil­lion, data com­piled by Bloomberg show. Many com­pa­nies list­ing in Hong Kong set aside more than half their IPO shares for pre­dom­i­nantly Chi­nese cor­ner­stone in­vestors, who typ­i­cally agree to hold on to their stock for six months in re­turn for early and guar­an­teed al­lo­ca­tion.

"If the mar­ket re­mains volatile and Chi­nese money can't get out, this means that it's go­ing to be dif­fi­cult to get any size­able IPO done," Philippe Espinasse, the for­mer head of Asia equity cap­i­tal mar­kets at No­mura Hold­ings Inc. and au­thor of "IPO: A Global Guide," said by phone. "A sig­nif­i­cant pro­por­tion of the cor­ner­stone in­vestors for Hong Kong IPOs nowa­days are Chi­nese in­vestors."

The three Chi­nese banks that went pub­lic in Hong Kong in the last 12 months re­lied on main­land China cor­ner­stone in­vestors and their af­fil­i­ates for an av­er­age 44 per­cent of their IPO size, ac­cord­ing to data com­piled by Bloomberg. Zhe­shang Bank hasn't set a new timetable for its of­fer­ing, the peo­ple said.

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