AgBank's Shanghai IPO may raise $20b

Beijing: Agricultural Bank of China set a price range for the Shanghai part of its initial public offering that will allow it to raise as much as $20.1 billion (Dh74 billion), according to three people with knowledge of the matter.

The Beijing-based bank may offer 22.2 billion shares in Shanghai at 2.52 yuan to 2.68 yuan apiece, the people said, declining to be identified before an official announcement.

Agricultural Bank last week priced shares in the Hong Kong part of its IPO at HK$2.88 to HK$3.48 each.

Agricultural Bank may still surpass Industrial and Commercial Bank of China's 2006 IPO as the world's largest if it exercises an option to expand the sale to $23.1 billion.

China's largest bank by customers is going public after the Shanghai Composite Index slumped 22 per cent this year and Fitch Ratings warned that 2009's record loans may saddle lenders with bad debt.

"You'd rather price the shares low to give it room for a rally on the debut than have it fallen from grace," said Leo Gao, who helps oversee about $600 million at APS Asset Management in Shanghai.

"This could be a booster for banking shares and the broad market."

Shares of ICBC, the world's largest bank, have slumped 22 per cent this year in Shanghai trading, while its closest rival China Construction Bank has dropped 21 per cent.

Withdrawn sales

Still, Chinese IPOs have this year defied the drop in the global market, where more than 30 companies have postponed or withdrawn first-time sales since the start of May, according to data compiled by Bloomberg. Shares of companies that went public in Shanghai and Shenzhen gained an average 29 per cent in their first month of trading through June 1, Bloomberg data shows.

Agricultural Bank board secretary Li Zhenjiang wasn't immediately available to comment.

The Shanghai pricing needs approval from the China Securities Regulatory Commission.