* Harbin to use proceeds to bolster balance sheet
* Final price represents price-to-book ratio of 0.86 - IFR
* Harbin secured $512 mln worth of cornerstone commitments
(Adds context on recent Hong Kong IPO activity, Harbin Bank
HONG KONG, March 25 Chinese commercial lender
Harbin Bank Co Ltd is set to raise $1.1 billion
through a Hong Kong initial public offering (IPO) after pricing
the deal near the bottom of a marketing range, in a sign of poor
demand for new issues.
The pricing of the deal comes at time when the benchmark
Hang Seng index has dropped nearly 7 percent so far this
year due to worries about slower economic growth in mainland
China, which also prompted two issuers to delay their Hong Kong
IPOs this month.
The Hong Kong IPO market has also been dealt a blow after
Alibaba Group Holding Ltd IPO-ALIB.N decided to conduct its
IPO in the United States, while a planned $6 billion offer from
Hutchison Whampoa Ltd's retail unit A.S. Watson was
pushed back by two to three years after Singapore state investor
Temasek Holdings acquired a nearly 25 percent stake in
the company last week.
Harbin Bank, based in the northeastern Chinese city of the
same name, priced the IPO at HK$2.90 a share, after offering
3.02 billion shares in a HK$2.89 to HK$3.33 range, said IFR, a
Thomson Reuters publication. The final price values the lender
at a 2014 price to book ratio of 0.86, the report added.
Hong Kong-listed Chinese bank shares, on average, trade at a
12-month forward P/B of 0.6, according to Thomson Reuters data.
Harbin's fund raising is the biggest in the city since HK
Electric Investments Ltd raised $3.6 billion in
Harbin Bank plans to use the proceeds from the deal to
improve its balance sheet and support its business growth,
including expanding into other regions of China and offering
cross border services such as trade finance and foreign exchange
The bank bills itself as one of China's largest lenders to
small- and medium-sized businesses. It secured $513 million
worth of cornerstone investments from seven investors including
Fubon Life Insurance and CITIC Capital.
Recently listed financial services companies in Hong Kong
have seen their stocks tumble as investors fled the sector on
concerns over rising bad debts in China.
Bank of Chongqing Co Ltd is down 18 percent from
its IPO in late October, while Huishang Bank fell 0.8
percent since going public in November. China Everbright Bank Co
Ltd has dropped 29 percent since its December listing.
China Cinda Asset Management Co Ltd, which buys
bad debts from Chinese lenders and invests in distressed assets,
has bucked the downtrend, climbing 22 percent since its December
ABC International, BOC International and China International
Capital Corp. (CICC) acted as sponsors of the Harbin IPO, with
eight other banks including CIMB, Credit Suisse and Haitong
International also hired as joint bookrunners.
The banks stand to earn $22.6 million in fees from the IPO,
equivalent to a 1.5 percent underwriting commission and an
incentive fee of up to 0.5 percent, according to the prospectus.
(Reporting by Fiona Lau of IFR; Additional reporting by Elzio
Barreto; Writing by Denny Thomas; Editing by Paul Tait and Miral