China’s leading investment bank has filed for an initial public offering in Hong Kong that could raise up to $1bn, officially restarting a process that stalled last year with the departure of its chief executive and longtime figurehead.
The filing to the stock exchange by China International Capital Corporation puts it on course to list by late September.
The application is one of a series by state-owned mainland companies preparing to float in Hong Kong, in what will amount to a test of investor appetite for Chinese companies since the collapse of the Shanghai and Shenzhen stock markets earlier this month.
China Railway Signal, the country’s track signal maker, began talking with investors this week and plans to price its deal, worth up to $2bn, next Friday.
China Huarong Asset Management, the second of China’s four “bad banks” to come to market, is also aiming for a September listing that could raise more than $2bn.
CICC was formed as a joint venture between Morgan Stanley and China Construction Bank in the 1990s, but the US bank sold its one-third stake in 2010 for $1bn to a group led by private equity groups KKR and TPG — both of which have been pushing for a flotation.
CICC’s largest shareholder is China Investment Corporation, the country’s sovereign wealth fund, which owns 44 per cent. Singapore’s sovereign wealth fund, GIC, holds 16 per cent. KKR and TPG each have about 10 per cent.
Last year bankers were caught off guard by the resignation of Levin Zhu, son of Zhu Rongji, China’s former premier. Mr Zhu joined the bank in 1998, three years after its inception, and was known for close links with a series of China’s state-owned enterprises.
CICC made its name in Hong Kong — Asia’s banking centre — with roles on megadeals such as the $21.9bn float of China’s ICBC in 2006 and Agricultural Bank of China’s $22bn deal in 2010. The AgBank deal ranked as the world’s largest IPO until being surpassed by Alibaba’s $25bn float in New York last year.
Deals involving CICC more recently included the listings last year of Dalian Wanda‘s commercial property arm and CGN, China’s nuclear power group. The two were Hong Kong’s biggest listings of 2014, raising a combined $7.7bn.
However, CICC’s planned listing comes as investment banks are struggling to make reliable profits out of China, where the industry has faced a general reluctance to pay for advice. On top of that, many of the more deal-hungry private groups are often happy to cut deals without advisers.
Nonetheless, China was the second-highest global payer of investment banking fees in the first half of this year, according to Dealogic, handing over $3.4bn, up more than a quarter from the same period last year. However, that was driven by China’s hot equity market — it has since cooled — and still amounted to just a sixth of the $19.3bn fees paid in the US.
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