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Industrial and Commercial Bank of China is planning an unprecedented simultaneous dual listing in Hong Kong and Shanghai in a move that demonstrates the growing depth of the mainland’s capital market.

ICBC’s listing in Hong Kong is expected to raise at least US$12bn, trumping the $9.7bn raised by rival Bank of China when it listed in Hong Kong last month. The mainland listing of ICBC is expected to raise a further $3bn. If ICBC raises a combined $15bn, it will be the world’s third largest IPO to date.

Mainland companies have traditionally opted to list in Hong Kong and seek a dual listing later in the US or Europe. However, the recent success of a Bank of China secondary listing in Shanghai has convinced authorities that the mainland’s domestic capital markets are strong enough to support large IPOs.

ICBC, the mainland’s biggest lender, is understood to have decided to prepare for the simultaneous listing following talks with the China Securities and Regulatory Commission, which is pushing hard for Chinese companies to list their shares on the mainland.

People close to the situation said that ICBC had finally agreed to plan for a simultaneous listing following the success last week of BoC’s mainland secondary listing, which raised a record Rmb20bn ($2.5bn).

One person familiar with the sale process said: “ICBC has regulatory approval to do a simultaneous listing and that now is the working assumption. This is ground-breaking stuff. But whether it happens will depend on market conditions at the time.”

The IPO is expected to take place in October this year but it is understood that no decisions have been made about how much stock will be offered in each market, or the price of the offerings.

A simultaneous float in Hong Kong and Shanghai would limit some of the political pressure on the Chinese government, which is facing a nationalist backlash against the purchase by foreigners of significant stakes in domestic companies.

The two previous listings of Chinese state banks in Hong Kong have not only provoked criticism from economic nationalists, but also from mainland institutions frustrated at seeing overseas investors buying stakes in well-known Chinese companies in which they cannot invest.

Retail investors in China have also been angered by the ability of Hong Kong investors to make large profits from Chinese IPOs in which they cannot participate.

The CSRC, the mainland regulator, is keen to boost the Shanghai market by attracting back high-profile Chinese companies that have listed abroad.

The prospect has become more attractive for those companies as the Shanghai market has risen sharply this year after a four-year slide. Air China and CNOOC, the oil and gas group, are other possible candidates for a mainland listing.

Investment bankers in Hong Kong say that they expect Shanghai and Shenzhen, the two mainland exchanges, to attract large numbers of Chinese companies over the coming years, following the return of investor confidence to domestic capital markets in the wake of a series of reforms.

Copyright The Financial Times Limited 2017. All rights reserved.
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