Agricultural Bank of China set to apply for $30b IPO

10:49, May 04, 2010      

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Agricultural Bank of China (Agbank), the smallest of the country's Big Four banks, will apply for a larger-than-expected $30 billion IPO, racing with rivals to raise funds as Beijing mops up excess cash from the economy.

Agbank plans to submit formal applications for a dual listing in Shanghai and Hong Kong this week with an eye to launching its massive IPO, the world's biggest ever, in July or even earlier, sources told Reuters Sunday.

"We all know the market window could be closed anytime within the next few months so whoever can sell their IPO first wins," said a source who was briefed on the bank's IPO plan.

"After China Construction Bank (CCB) announced its rights issue plan, Agbank definitely felt more hurried to push its IPO plan forward," said one source who declined to be named because he was not authorized to speak to the media.

Agbank's top management has asked its underwriters to aim to bring the size of its IPO close to $30 billion versus its original, more modest target of at least $20 billion, said the sources.

The bank's more ambitious, larger IPO goal came just days after two major domestic rivals, CCB and Industrial and Commercial Bank of China (ICBC), settled out their mega-sized fund-raising plans separately as Beijing asked lenders to boost capital amid potential credit risk concerns.

CCB announced last week its up to $11 billion rights issue plan. ICBC will begin to seek mandates for its up to $12 billion capital-raising plan this week, sources have said.

China Sunday raised the proportion of deposits that lenders must keep in reserve at the central bank, another step in its months-old campaign to mop up excess cash in the economy at a time when inflation is on the rise.

Beijing is keen to help Agbank finish its restructuring and IPO so it can better support the country's agriculture-related sectors.

Source: Global Times


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