The Agricultural Bank of China today confirmed plans to raise a world-record $23.2 billion in a dual IPO in Hong Kong and Shanghai, passing the previous record of $22 billion dollars.
The last of China's 'big four' state banks to list said it would raise the money if its monster initial public offering is fully subscribed when it begins tomorrow.
Major institutional investors including sovereign wealth funds have already expressed strong interest in the IPO, which is on course to surpass the previous record set by Industrial and Commercial Bank of China.
Xiang Junbo, chairman of AgBank, said government efforts to boost growth in China's depressed central and western regions would help the rural lender. He said that the bank is well positioned to capitalise on China's next wave of growth.
The bank, which has been criticised for the amount of bad loans on its books, has worked in recent years to chop that figure, Xiang said. 'The bank has made substantial improvement in the last few years,' he said.
AgBank said it would give the final pricing of the IPO on July 7, and its stock would start trading in Shanghai on July 15 and in Hong Kong on the following day.
Estimates for the IPO had ranged from about $19 billion to $30 billion as market volatility left a key question mark over the sale's chances of smashing previous records.
Some analysts consider the rural lender to be the weakest of China's big banks, owing mainly to its burden of bad loans and the nature of its business.
They say the return on capital from rural loans is typically 20-30% less than that for loans in urban areas, as the size of the loans is generally smaller and monitoring costs higher.
Still, 11 so-called cornerstone investors - including the state investment funds of Qatar and Kuwait, British-based bank Standard Chartered and Hong Kong's richest tycoon Li Ka-shing - are pouring money into the massive sale.
The share sale comes after Hong Kong's bourse, faced with growing competition from Shanghai in recent years, claimed top spot as the world's largest IPO market last year, raising almost $32 billion. However, market volatility has also seen several companies shelve Hong Kong IPOs in the past two months.
Swire Properties, a major property developer in the territory, aborted a planned a share sale worth $3.09 billion last month, two days after Giti Tire, China's largest tyre maker, shelved a $500m IPO.
