ABC A+H Strives For 7 Moon Phases, Three Suspensions To Be Solved
"Agricultural Bank of China strives to land both A shares and H shares in July this year. Agricultural Bank of China and the entire underwriting team have reached a consensus on this point. The distribution ratio of A shares and H shares is tentatively set to be half and half respectively, and a call back mechanism will be adopted." On May 25, a layman involved in the underwriting of ABC's H shares disclosed to our reporter.
In the opinion of this person, whether the IPO of A% 2BH shares can be carried out as expected in July is one of the keys at present is the approval progress of the CSRC. "The approval time of the Hong Kong Stock Exchange is more flexible, and H shares can cooperate with the IPO process of A shares."
As the closing battle of the share reform and listing of the four state-owned banks, the IPO of Agricultural Bank of China has attracted much attention at home and abroad. In addition to the constant speculation caused by the listing time, the pricing of the IPO and the profit distribution of its huge underwriting group are the focus issues that have not yet been disclosed in this IPO. ?
Early June or A-share approval
"Agricultural Bank of China has submitted IPO application materials to the CSRC for a period of time. According to the normal progress, it has indeed reached the time point of the preliminary review meeting and the development review meeting of Agricultural Bank of China. Due to the confidentiality provisions, the investment bank cannot disclose more specific time arrangements." An insider of the A-share underwriter of Agricultural Bank of China told our reporter. ?
However, the person pointed out that according to the relevant regulations of the CSRC, the companies to be listed must disclose their application draft of prospectus in advance on the website of the CSRC five days before the issuance of the review meeting, and Agricultural Bank of China is no exception. ?
As of our reporter's press release, the official website of the CSRC has not seen the pre disclosure of the prospectus of ABC. ?
The above layman predicted: "If everything goes well, ABC is most likely to get the A-share IPO approval in early June. Judging from the known progress, the remaining time in May is too urgent."
The necessary procedures for ABC's A-share IPO include passing the review of the preliminary examination committee and the issuance examination committee successively, then obtaining the listing approval document approved by the CSRC, and then starting road shows and inquiries. ?
"Generally, the companies to be listed will be submitted to the preliminary review meeting 1-2 weeks after passing the preliminary review meeting. Agricultural Bank of China is a special project, and the regulators should try to shorten this interval as much as possible," said the above insider. ?
A senior executive of an outsider in China told our reporter: "In view of the special background of Agricultural Bank of China, investors are not worried about whether its IPO application can be approved, and even the underwriting syndicate does not have to worry about the underwriting of shares."
"The success of ABC's IPO should be measured by the final pricing of A shares and H shares. As one of the four major state-owned banks, I have no doubt that its shares can be successfully sold." The executive said frankly. ?
Pricing refers to ICBC or deposit variable
At present, market participants generally predict that the total financing amount of ABC in both places is about 30 billion US dollars. According to a number of people from the underwriting group of Agricultural Bank of China, there is no final conclusion on the geometry of per share pricing. ?
On the afternoon of May 25, Liu Guangyao, the managing director of Galaxy Securities Investment Banking Department, told our reporter by telephone: "The pricing will be the result of market inquiry, not the decision of ABC and our underwriters."
On the same day, Xie Jijun, the managing director of the investment banking department of China Merchants Securities (600999), also told our reporter: "The four state-owned banks have their own characteristics, and their share prices will definitely reference each other."
Xie Jijun admitted that from the perspective of the current net value of bank shares in Shanghai and Shenzhen stock markets, the pricing of ABC's listing in the second half of the year should be cautious. ?
However, he also pointed out that "the financing scale of this IPO of Agricultural Bank of China is very large, which will inevitably lead to more investors participating in the subscription of new shares and a wide range of coverage, and there will be an optimistic opportunity in pricing."
According to the said insider, "At present, the opinions of relevant parties are based on the share price of ICBC."
"During the pre roadshow in Hong Kong, the company initially communicated with investors on the basis of double PB." The above layman said, "It needs to be emphasized that the price is not determined by an investment bank or company alone, but by the market."
Public data shows that the new credit of ABC in 2009 and the first quarter of 2010 was 1.03 trillion yuan and 301.4 billion yuan respectively. At the end of 2009, its capital adequacy ratio was 10.07%, lower than the CBRC's requirement of 11.5%. ?
According to industry analysis, the huge pressure on its capital is accompanied by investors' doubts about its profits and risks. ?
As ICBC is mainly engaged in urban financial business, its profitability (ROE) index is lower than that of ICBC. The listing of ICBC in Hong Kong shares coincided with the overall success of the market in 2006. One of the challenges faced by ABC in the second half of the year is that the overall valuation of the banking sector is low. ?
Wu Yonggang, a bank analyst at Guotai Jun'an, estimates that the dynamic price to book ratio (PB) of A-share banking sector is 1.8 times at present, while since 2006, the lowest valuation level of the banking sector has reached 1.5 times PB in 2008. ?
"If the temporary policy factors are eliminated, the reasonable PB level of Chinese bank shares will be 2.3-2.5 times in the normal future," he said. ?
Underwriting rate has not been finalized
The luxury underwriting group of ABC includes four A-share lead underwriters, including CICC, CITIC Securities (600030), Galaxy Securities, Guotai Jun'an Securities, and seven H-share lead underwriters, including Goldman Sachs and Morgan Stanley. Among them, CICC became the only "A+H" dual underwriter list. UBS and China Merchants Securities (600999) served as financial advisers for ABC's H shares and A shares respectively. ?
"Before, there had never been so many investment banks participating in the same IPO in the listing of Chinese funded banks or even in the overseas listing of other central enterprises," said the above non bank executives. ?
How to allocate the internal workload and how to coordinate the work direction are enough to give the underwriting team members a headache. At present, it is still unknown how much underwriting fees and consulting fees can be allocated to more than 10 domestic and foreign investment banks that are competing for the first IPO. ?
The above-mentioned A-share and H-share underwriting syndicates confirmed to our reporter: "The underwriting fees of the two places have not been determined, and the service fees of financial consultants have not been specified."
Previously, ICBC, CCB, BOC and other Chinese banks' underwriting fees for Hong Kong shares were all around 2.5%, while the difference in A-share underwriting fees was large. ?
"The final service fee received by each investment bank is mainly determined by Agricultural Bank of China, and the business ability and work experience must have been considered when selecting candidates." The above non professional executives believe. ?
However, while the luxury underwriting syndicate added luster to the IPO of ABC, it also brought another hidden worry. ?
The chief inspector of a fund company in Beijing pointed out to our reporter: "According to the provisions of the Fund Law, fund assets may not be used to buy or sell securities issued by shareholders who have a controlling relationship with their fund managers or fund custodians, or companies that have other major interests with their fund managers or fund custodians, or securities underwritten during the underwriting period. The transaction projects directly related to the controlling shareholders of the fund company must be avoided. " ?
Therefore, taking CITIC Securities (600030), the A-share underwriter of ABC, as an example, wholly-owned Huaxia Fund, cannot participate in the innovation of ABC.
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