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Everbright to raise funds
By Wang Bo (China Daily)
Updated: 2009-07-23 07:57
China Everbright Bank Co is planning to rope in eight institutional investors through a private placement of 5.2 billion shares as part of its efforts to expand its capital base, a senior executive of the bank said yesterday.
"The bank could raise over 11 billion yuan ($1.61 billion) from the share sale, which has been cleared by the shareholders and is now awaiting approval from the regulator," the bank official, who declined to be identified, told China Daily. The long-anticipated introduction of strategic investors will help shore up the lender's capital adequacy ratio to above 10 percent, he said. The Beijing-based commercial lender, the nation's 11th largest by assets, has been grappling with capital strain problems in recent years. In a statement in June, the bank said its capital ratio may have dropped below 9 percent after paying the first dividend in six years, and is barely above the required 8 percent. In the annual report released in May, the bank said it aimed to raise its capital adequacy ratio from the then 9.1 percent to 10.5 percent by the end of the year by roping in financial investors and issuing bonds. Among the eight institutional investors, Shanghai Chengtou, a local water supplier listed in Shanghai Stock Exchange, said in a statement that it would spend 792 million yuan to buy 360 million new shares at a price of 2.2 yuan per share.
"The other six financial investors are major State-owned enterprises," the bank executive said, but declined to name the companies as the sale is awaiting regulatory approval. The tie-ups are subject to a lock-up period of three years, during which Everbright Bank expects to forge strategic relationships with investors by providing deposit, settlement, financing and bond issuance services, he said. The stock sale comes at a time when the bank is stepping up efforts to float an initial public offering on the mainland bourses. Analysts said institutional investors could expect bumper returns if the lender goes public in the near future, as the current stake sale is at a very low price. "We are expecting to get listed as early as next year, as we have submitted our IPO related documents to the regulators for approval," the bank executive said. Central Huijin Investment Co, a unit of China's $200 billion sovereign wealth fund, controls 71 percent of Everbright Bank. Everbright Group and its affiliates own 13.8 percent, with other corporate investors holding the balance.
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