Bank seeks waivers for record $32b IPO

Industrial & Commercial Bank of China will seek waivers from the Government to help sell a record US$21 billion ($32 billion) of stock in an initial public offering.

Sources said conflicting regulations in Hong Kong and Shanghai were hampering China's biggest bank's plan to sell US$14 billion of shares in Hong Kong and US$7 billion in a simultaneous offering in Shanghai.

Chinese regulations require underwriters to provide forecasts of where the stock will trade after the IPO, while Hong Kong prohibits such predictions.

Chinese companies, including China Mobile and PetroChina, opted for Hong Kong IPOs in part because the city's rules meet global standards. Exempting ICBC from rules that clash with Hong Kong's would set a precedent and encourage more dual sales, said Tian Qing, a manager at China Asset Management in Beijing.

"Being able to sell the shares in China at the same time and same price as in Hong Kong is one sign of alignment with global markets," said Tian. "It's ... seen by the Government as a symbolic achievement."

Nippon Telegraph & Telephone, the world's largest phone company, holds the record for an IPO, raising US$20.5 billion when it went public in 1986.

China's Communist Party-led Government is two decades into a drive to introduce free-market policies that has helped deliver average annual economic growth of 9.8 per cent. In China, the state still controls all but one of the country's more than 130 banks, as well as the country's two stock exchanges and about two-thirds of publicly traded companies' shares.

ICBC last year announced plans for an initial share sale in Hong Kong. The bank began considering a simultaneous share sale in May after China ended a year-long ban on domestic IPOs. The decision followed a 47 per cent jump in China's Shanghai Composite Index in the previous 12 months.

Companies based in mainland China have raised US$51 billion since 2000 from IPOs in Hong Kong, 65 per cent more than in China.

China's securities regulator requires IPO underwriters to provide research reports that give an estimate of where a stock will trade after the sale is completed. Hong Kong regulators see such predictions as an attempt to unduly influence investors.

"Overseas investors will welcome the company's efforts to ensure better and more equal disclosure of information in both markets," said Tat Auyeung at Apex Capital Management in Hong Kong.

The entire company may be valued at as much as US$116 billion, ranking it seventh in the world, or about the same size as Zurich-based UBS, Europe's biggest bank by assets.

- BLOOMBERG