China Construction Bank Ltd (CCB) plans to raise up to 61.6 billion yuan ($9.2 billion) in Asia's biggest rights issue outside Japan, as China's No 2 lender aims to shore up capital after a lending binge in 2009. The rights offer in Hong Kong and Shanghai follows Bank of China's announcement for a $9 billion rights offer and caps a rich year for capital raising by Chinese banks, which includes Agricultural Bank of China's record beating $22.1 billion IPO.
Still, CCB is raising about 18 percent less than the 75 billion yuan it initially sought. Strong gains in banking shares and bumper quarterly profits have eased funding pressure. "I think CCB is cutting the size of fundraising to sweeten itself to investors who are now finding banking shares attractive," said Huatai Securities Co analyst Liu Xiaochang.
"This should be a well-thought out move that balances CCB's own capital needs and long-term return for investors." CCB's Hong Kong shares extended their winning run and were 1.3 percent higher at HK$7.74 at 0605 GMT in a flat market, having hit their highest level since December 2007.
CCB is offering 0.7 shares for every 10 existing shares at 3.77 yuan per A-share and HK$4.38 per H-share. The Shanghai and Hong Kong issue prices are the same after currency conversion. The rights issue, first proposed in April, comes at a 43 percent discount to CCB's Hong Kong closing price of HK$7.64 on Monday, and is 27 percent lower than its A-share closing price of 5.16 yuan. Bank of America, which owns a 10.95 percent stake in CCB, declined to comment on whether the US bank would participate in the CCB rights offer. But other shareholders were broadly supportive of the rights offer.