China's Everbright delays $6 billion offer, market rout
HONG KONG (Reuters) - Mid-sized lender China Everbright Bank Co Ltd (601818.SS) on Friday delayed meetings with investors to promote a planned Hong Kong share offering of up to $6 billion, sources said, becoming a prominent casualty of slumping global equity markets.
The delay could signal an uphill climb for companies in Asia-Pacific, the top global venue for initial public offerings, as they gear up to raise nearly $90 billion from stock sales.
Everbright Bank, which in late June had already postponed the launch of the offering because of volatile market conditions, was slated to begin a roadshow next week ahead of a planned listing on August 18, sources with direct knowledge of the plan told Reuters.
European and U.S. markets plunged on Thursday as fears mounted about the health of the global economy. Major U.S. indexes fell more than 4 percent, with the technology-heavy Nasdaq down 5 percent, erasing gains for the year as the broad-based S&P 500 entered a correction of more than 10 percent from a peak in May.
The selloff continued in Asia, where markets tumbled as much as 5 percent on Friday.
"It is hard to see a big roaring bull market after what happened last night. There is some very severe technical damage that has been inflicted on markets," said Mark Matthews, Singapore-based head of research, Asia, at wealth manager Bank Julius Baer.
Everbright Bank could slash the deal to between $2.5 billion to $3 billion, said IFR, a Thomson Reuters publication. The bank has secured $1.2 billion from so-called cornerstone investors and may head back to the market in September, IFR said.
Slumping markets also prompted container leasing company China Shipping Nauticgreen to shelve its Hong Kong initial public offering of up to HK$1.5 billion ($192.3 million), IFR said. The deal was set to be priced on August 10.
BOFA'S CCB MOVE EYED
A prolonged market turmoil will make it difficult for Bank of America (BAC.N) to exit its $17.5 billion worth stake in China Construction Bank (0939.HK) (601939.SS) which comes off lock-up by the end of August, analysts and bankers said.
There was expectation that BofA would likely sell at least half of its stake to boost its capital.
"Definitely you need some stability in the markets before investors look at deals again," said an equity capital markets banker who couldn't speak publicly on the matter. "People are in a capital-protection mode now."
The repercussions are also being felt elsewhere. U.S. employee benefits management company WageWorks Inc delayed its IPO after the heavy stock market losses on Thursday, according to a person familiar with the offering.
The IPO was scheduled for Friday, but it is now expected early next week, the person added.
Ally Financial, which is planning a $6 billion initial public offering and was hoping at one point to launch the offering in June, then considered the late summer, is now not expected to come to the market before September, sources said.
And a secondary offering of General Motors Co (GM.N) shares by the U.S. Treasury also looks likely to be later than originally anticipated.
Equity issuance in the region excluding Japan rose 3.5 percent to $109.1 billion in the first half of the year, the second-highest for the six-month period since 2007, according to Thomson Reuters data. Companies have unveiled plans for IPOs and follow on deals of nearly $90 billion, the data showed.
Chinese banks and insurance companies alone had planned to raise up to $35.4 billion in share offerings in Hong Kong and China by the end of the year to bolster their balance sheets and fund lending growth, according to Thomson Reuters calculations.
Large non-financial offerings include a $2.5 billion IPO by China Sinohydro Group Ltd, the builder of the Three Gorges dam, and Great Wall Motor Co Ltd (2333.HK), which has won approval to raise about $500 million in an offering in China.
China Everbright Capital, China International Capital Corp, Morgan Stanley (MS.N), JPMorgan Chase & Co (JPM.N), UBS (UBSN.VX), BNP Paribas SA (BNPP.PA), BOC International, HSBC (HSBA.L) and Shenyin Wanguo were hired to manage the Everbright Bank offering. ($1 = 7.801 Hong Kong dollars)
(Additional reporting by Aipeng Soo in SHANGHAI and Saeed Azhar in SINGAPORE; Editing by Muralikumar Anantharaman)
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