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Friday, October 20, 2006

World's Largest IPO, Industrial & Commercial Bank of China, Sets Price

The largest IPO in history, Industrial & Commercial Bank of China, priced its mammoth IPO at the top end of expectations due to overwhelming investor demand. ICBC raised a total of $19 billion in the first ever simultaneous stock sale in both Hong Kong and Shanghai, although as we noted this would be difficult for most Americans and even many institutions to directly participate.

The state-owned bank priced its Hong Kong offering at HK$3.07 a share, at the top end of the indicative price range of HK$2.56-HK$3.07 ($0.33-$0.39). At the price it looks like the Hong Kong portion is some $13.9 Billion in currency translation. The total $19 Billion raised now eclipsed the $18.4 Billion IPO from Japan's NTT Mobile back in 1998.

The official pricing will be effective Monday. The company would have gone public sooner except it had waves of bad loans and restructuring that had to be given a clean slate before the IPO could proceed. Some reports said more than 1 million people in Hong Kong tried to buy into the IPO on the local exchange and there was coverage ratio of 30 from institutions (meaning 30-times oversubscribed), so the top-end of the range was a shoe-in and the underlying aftermarket support is essentially thought to be a given.

Here is what we said about it on October 9 and here was the initial article from the weekend edition we ran from September.

Jon C. Ogg
October 20, 2006

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