30 Jun 2010
Asia-focused bank Standard Chartered Plc said it will invest $500m as a
cornerstone investor in Agricultural Bank of China’s IPO in Hong Kong.
AgBank is seeking to raise more than $20bn in a Hong Kong and Shanghai
IPO, and sources had previously told reporters that Standard Chartered
would invest $500m.
The listing is expected to value AgBank at
about $150bn. Standard Chartered will be buying just over two percent of
the shares on offer in the IPO and will get a stake of about 0.3
percent in the enlarged bank.
The two banks have signed an
agreement to develop new business opportunities together.
Standard Chartered, this deal has a lot of potential. However, the
payback could be well into the future and more near term concerns over
(the) Chinese economy slowing may weigh on Standard Chartered’s share
price in the meantime,” said Bruce Packard, analyst at Seymour Pierce in
The bank, which is based in London but derives over
four-fifths of its profits from Asia, aims to take advantage of AgBank’s
extensive domestic network, in return providing its partner with access
to its international footprint.
This could include access to
capital markets, international trade corridors, financial markets and
consumer finance sectors, and share information, research and staff
training, Standard Chartered said.
AgBank is the last of China’s
big four banks to list its shares and the first to do so without first
bringing in a major foreign strategic investor. The commercial bank,
started in 1951, has over 23,000 branches and about 2.6 million
corporate customers and 320 million retail customers.
Chartered said it will pay for the stake from its internal cash
resources, which is likely to shave about 10 basis points off its Core
Tier 1 capital ratio of 8.9 percent at the end of 2009, analysts