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IPO Of ICBC – The Role Of China International Capital Corporation Limited

IPO Of ICBC – The Role Of China International Capital Corporation Limited. Group 3. Introduction. General investment bank function Distinguishing feature of CICC IPO of ICBC. The investment bank Roles and Functions in IPO. Expertise Market information Timing Pricing Listing service

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IPO Of ICBC – The Role Of China International Capital Corporation Limited

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  1. IPO Of ICBC –The Role Of China International Capital Corporation Limited Group 3

  2. Introduction • General investment bank function • Distinguishing feature of CICC • IPO of ICBC

  3. The investment bank Roles and Functions in IPO • Expertise • Market information • Timing • Pricing • Listing service • Underwriting • Private placement

  4. Roles and functions in IPO • Legal requirement • A new applicant must appoint a sponsor to assist it with it listing application (Main board rule 3A.02) • A Main Board sponsor must be a corporation or an authorized financial institution (Main Board Rule 1.01)

  5. A Main Board sponsor must be licensed or registered under applicable laws to advise on corporate finance matters (Main Board Rule 1.01)

  6. Underwriting • Underwriting Syndicate • Lead or managing underwriter • Underwriting dealer • purchase the shares and redistribute the shares to the investors • Selling group • only earns commission

  7. Documentation • Preparing the new applicant for listing, lodging the formal application for listing and all supporting documentation (Main board rule 3A.11)

  8. Source: Hong Kong Shock Exchange and Clearing Ltd.

  9. The prospectus • company's business, financial statements, biographies of officers and directors, detailed information about their compensation, etc. • Road show • promote the company prospect and the quality of management team • Collect market information • Private placement • Usually before IPO • Numbers of individual and financial institutions

  10. Greenshoe (over-allotment option) • right to sell additional shares • up to 15% of the original number of shares offered

  11. CICC Profile • Establish on 1995 • Strategic partnership among prestigious Chinese and international financial institutions and corporations • First joint venture investment bank in China

  12. CICC Profile • Registered capital of US$125 million • Headquartered in Beijing • With offices in HK, Shanghai & ShenZhen

  13. 6 Core business

  14. Shareholders

  15. Business activities Examples, • corporate restructuring • Inter-bank lending and borrowing • purchasing and selling foreign currencies • mergers and acquisitions

  16. CICC Culture • CICC culture mainly concern on: • Integrity • Professionalism • Creativity • Competitiveness • Teamwork

  17. Business

  18. CICC Business

  19. Investment Banking Department • IBD services include : • Equity financing • Debt financing • Corporate restructuring • Mergers and acquisitions in both domestic, international capital market • Asset securitization

  20. Equity Financing • Equity Financing service includes : • IPO • follow-on offerings • private placements

  21. Debt financing • Debt financing service includes : • institutional bonds • convertible bonds • short-term financing bonds • financial bonds

  22. Strengths

  23. Lead underwriter • Leading Chinese enterprises to access overseas • CICC has led four of the top five A-share IPOs in domestic equity market. • CICC has led all top five debt (including convertible debt) offerings in domestic debt market.

  24. Bookrunner Ranking for Overseas Equity Issuing of Chinese Enterprises Since 1997 Note：The ranking was made by allotting the issuing size averagely between bookrunners. Information Source：Equityware, up to December 31, 2005

  25. Bookrunner Ranking for Overseas IPO Issuing of Chinese Enterprises Since 1997 Note：The ranking was made by allotting the issuing size averagely between bookrunners. Information Source：Equityware, up to December 31, 2005

  26. Top Overseas IPO of Chinese Enterprises Since 1997

  27. Professional investment team • Senior Management with Global Experience • even served as Managing Director in a leading U.S. investment company • can contribute more knowledge • help the CICC has a good operation management

  28. Extensive Experience in Domestic Market • with outstanding performance records and industry reputation • Management Group with Excellent Professional Attributes • have good reputations in financial field • without any misdemeanor records.

  29. Case study: IPO of ICBC How does CICC Help ICBC to issue IPO?

  30. Source : HKEx

  31. Planning and Preparation Selecting the sponsor, advisers and underwriters • IPO of ICBC is the world’s Biggest one • near $300 million banking fees → Competition • CICC Success as Chief investment bank

  32. Role of CICC • Joint global coordinator • Joint bookrunner • Joint sponsor for both H and A share Source : HKEx

  33. Preparing the timetable • Specific timetable of the issue of IPO was prepared on May

  34. Source : HKEx Structuring Capital Share : • Before Global Offering

  35. Source : HKEx Structuring • Upon Completion of Global Offering and A Share Offering

  36. The Listing Application On 22nd June : • Submit the advance booking form (Form A1 in Appendix 5 to the Main Board Rules) with a timetable to HKEx On 18th July : • Submit the Formal application for listing

  37. The Listing Application On 21st September : • Hearing by Listing Committee • Obtaining approval from the Listing Committee of the Exchange

  38. Targeting and Contacting Investors Road show • Over the world like Singapore and some European countries Road Show in Hong Kong • Clearing up nonperforming loans of the bank

  39. Private Placement Investors in Hong Kong • HK$27.2 billion worth of shares • 27 percent of H shares. • Li Ka-shing - HK$1.6 billion • Lee Shau kee - HK$1.6 billion Overseas investors • GIC Direct Investments - HK$2.8 billion

  40. The offering prospectus • 16/10/2006 – 19/10/2006White Application Form + Prospectus • 27/10/2006 Listed Date Prospectus distribution • HSBC • ICBC • Hang Seng Bank • Bank of China Limited • Standard Chartered Bank Limited

  41. e-IPO • www.eipo.com.hk • The first H share allowing Write Application though eIPO • Main difference : - check account are not necessary

  42. Price Determination • Set between 1.95 and 2.23 times 2006 price-to-book value • Deutsche Bank : pricing will be up to 2.9 times price-to-book value • CICC : the fair value should be about 2.31 times 2006 price-to-book value

  43. Stabilization • Strategic investors agreed not to sell / dispose / transfer any shares for certain period of time • Lock-up period • Private Placement - 12 months • Agree to inform before dispose • Strategic investors - 3 years • Only up to 50% of the share were permitted to sell / dispose / transfer

  44. Conclusion

  45. Main Function • Giving Advice • When to issue • How many • What price • Filing Documents • Prospectus • Underwriting • Road Show

  46. IPO issue process

  47. Issue Particulars

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