June 14, 2017 / 3:51 AM / a month ago

Guangzhou Rural Bank makes subdued HK debut after $1 billion IPO

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A woman walks by a branch of Guangzhou Rural Commercial Bank in Guangzhou, Guangdong province, China, October 1, 2012.Stringer

HONG KONG (Reuters) - Shares in Guangzhou Rural Commercial Bank Co Ltd (GRCB) (1551.HK) traded mostly flat in their debut on Tuesday as retail investors shied away from the largest IPO in Hong Kong so far this year, a sign of diminishing interest in financial sector listings.

Banks, brokerages and other financial services firms typically account for the bulk of new listings in the city, but have only comprised 23 percent of IPOs so far in 2017, weighed down by concerns over rising bad debt in China.

The subdued first day of trade contrasts with heavy interest in WuXi Biologics Cayman Inc (2269.HK), a rapidly growing contract drug researcher and development firm, that surged as much as much as 39 percent in its debut earlier this month.

China's No.5 rural commercial bank by assets edged up to HK$5.12, compared with its IPO price of HK$5.10. The benchmark Hang Seng index .HSI was flat.

GRCB priced its $1 billion IPO slightly below the middle of its marketing range of HK$4.99 to HK$5.27 per share.

Demand from retail investors - who have a significant influence over first-day trading in Hong Kong share offerings - accounted for 0.45 times the number of shares on offer in the deal, the lender said in a securities filing on Monday, underscoring weak appetite for the deal.

The institutional tranche was moderately oversubscribed.

The deal is the second by a rural commercial bank in Hong Kong this year, following a $446 million listing by Jilin Jiutai Rural Commercial Bank Corp Ltd (6122.HK) in January.

Non-performing loans at Chinese commercial banks rose to 1.58 trillion yuan ($232 billion) at the end of March, from 1.51 trillion yuan in December, regulatory data showed. With the world's No.2 economy growing at a slower pace, that figure is expected to climb further, analysts have said.

Other lenders looking to go public this year include Zhongyuan Bank and Bank of Gansu, which plan to raise about $1 billion and $700 million respectively.

Reporting by Elzio Barreto; Editing by Richard Pullin and Edwina Gibbs

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