By Carrie Chen
Updates share price
HONG KONG (Jan 18) -- Shares of Bank of Gansu rose 7% on their trading debut in Hong Kong on Thursday after raising about HK$5.95 billion ($760 million) in gross proceeds from an initial public offering.
The stock opened for trading at HK$2.83, compared with its IPO price of HK$2.69 apiece. It rose as high as HK$2.94 intraday before ending 7% up at HK$2.88, with more than 124 million shares having changed hands. The stock had added 2.6% at a gray market platform operated by Phillip Securities on Wednesday.
The Gansu province-based city commercial bank's 2.21-billion-share IPO was priced at the mid-point of an indicative range of HK$2.61 to HK$2.77 apiece.
Bank of Gansu, the second-largest bank by assets in China's northwestern province of Gansu, had a network of nine branches and 189 sub-branches as of June 30. There were 134 city commercial banks in China as of Dec. 31, 2016, holding 12.2% of total assets of China's banking industry, according to the lender's prospectus.
Bank of Gansu reported an 18% increase in net interest income for the six months ended Jun.30 to 3.75 billion yuan ($582.7 million), while profit for the period more than doubled to 2.05 billion yuan. The bank expects to use net proceeds of about HK$5.74 billion to strengthen its capital base.
"In general, we are positive on the mainland banking shares this year as their valuations are lower than other Asian banks," said Steven Wong, investment analyst at Harris Fraser. "With China's economic recovery, as well as supply-side reforms and deleveraging policy starting to give initial results, the asset quality of banks is believed to have improved."
Still, Wong said investors remain more inclined toward existing large-scale mainland banking shares. "They are more cautious on the newly-listed companies," he said.
Four cornerstone investors - Hong Kong Dasheng Investment Holdings, Huaxun International Group, China Create Capital and Huarong Rongde (Hong Kong) Investment Management - invested $400 million in the offering.
CMB International Capital, CCB International Capital, Huatai Financial Holdings (Hong Kong), Guotai Junan Capital and BOCI Asia are the joint sponsors for the offering.
- By Carrie Chen; Carrie.Chen@NikkeiNewsrise.com; +852 39605153
- Edited by V. Phani Kumar and Suzannah Benjamin
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