Bank of Shanghai IPO set to be big
Outlook is good because the market has liquidity, but is short of good assets
The initial public offering of Bank of Shanghai Co Ltd is expected to become the largest one this year in China’s A-share market, raising 10.7 billion yuan ($1.6 billion).
The city commercial bank will issue no more than 600.5 million shares and sell shares at 17.8 yuan each, it said in its prospectus to the Shanghai Stock Exchange.
The bank’s price-to-earnings ratio will be 8.3 after the sale, according to the filing. That compares with an average of about eight for lenders listed on the mainland.
The online and offline subscription will start on Nov 2. The funds financed will be used for replenishing capital.
“I believe the IPO of Bank of Shanghai will be popular among investors because of China’s adequate liquidity and the lender’s regional advantage and good business performance,” said Dong Dengxin, a finance professor at Wuhan University of Science and Technology.
Dong said while China’s liquidity is ample, the market is short of good assets. Bank of Shanghai can be a good choice as it is located in China’s financial hub and its business performance is also good.
According to Bank of Shanghai, its revenue from January to September this year is estimated to be between 26.2 billion yuan to 26.6 billion yuan, and its yearon-year growth will be between 7.3 percent to 8.9 percent.
The non-interest income of Bank of Shanghai in 2015 totaled 6.5 billion yuan, increasing 40.1 percent year on year, according to the filing. The bank is concentrating on developing investment banking, wealth management, private banking and innovative businesses, it said.
Hong Hao, chief strategist at BOCOM International Holdings Co, said although different banks have different corporate strategies, it is always important to control risks while developing innovative businesses.
Hong said he also looks favorably on the IPO of Bank of Shanghai because the previous city and rural commercial banks issued shares smoothly this year and the market is full of liquidity.
Bank of Jiangsu Co Ltd, Bank of Guiyang Co Ltd, Jiangsu Jiangyin Rural Commercial Bank Co Ltd, Wuxi Rural Commercial Bank Co Ltd, Jiangsu Changshu Rural Commercial Bank Co Ltd have already been listed this year.