ABC A Shares IPO Restart Strategic Placement

As the only bank that has not yet been listed in the five largest commercial banks in China, the Agricultural Bank is finally ready to open the door to IPO.

In the way of distribution, "strategic placement" again attracted attention.

In its draft of the prospectus, the Agricultural Bank said: "this issue will adopt a combination of the strategic placement of A share strategic investors, the inquiry and placement of inquiries under the network and the purchase and issuance of online funds."

H-share will also adopt the way of issuing cornerstone investors.

As the Agricultural Bank of China may become the world's largest single IPO this year, domestic and foreign institutional investors are very interested in it, including more than 10 foreign investors, including large financial institutions, business groups, domestic and overseas sovereign funds, Hongkong local rich and central enterprises group, have expressed their investment intentions to ABC, and they will become the first strategic investors of A shares and the cornerstone investors of H-share.

A large brokerage investment bank told the first Financial Daily reporters that the strategic placement was to stabilize the issuance of large cap stocks, and so did the Agricultural Bank's issue.

Because the current two market trend is not very optimistic, and the number of agricultural bank issuing is relatively large, the financing pressure brought to the market is also larger. One of them will be allocated as a strategic placement, which can also reduce the pressure on the two tier market.

In fact, in July 2006, the first single strategic placement of 601006.SH was completed, and the final single China Ocean (601919.SH) and A share IPO strategic placement were completed for nearly a year in June 2007.

According to Wind information statistics, a total of 12 listed companies made strategic placement during the year.

With the unprecedented market trend in 2007, regulatory thinking has also changed.

The investment bankers believe that the strategic placement is no longer adopted by the A shares issued by the listed companies after China's COSCO. It is hoped that the irrational market will be controlled by increasing the stock supply in the two tier market.

At the end of March 2007, the CSRC issued a notice on the issue of strategic rationing to the various sponsoring agencies (hereinafter referred to as the notice), which stipulates that the strategic investors of the issuers should be the actual holders of the allotment of shares, and the source of funds should be their own funds.

However, the three major banks, such as 601398.SH, 601328.SH and 601988.SH, have been strategically placed in the process of issuing.

Only 601939.SH, which was issued and listed in September 2007, is the only one of the five major commercial banks that has not chosen the way of strategic placement.

According to our reporter's statistics, ICBC issued 5 billion 769 million shares of strategic shares to A share investors at the time of issuing, accounting for 38.59% of the total allotment scale after the placement of the shares, and 1 billion 286 million shares of the bank's strategic investors to A shares, accounting for 19.8% of the IPO issued at that time. The Bank of communications targeted 957 million shares of strategic investors, representing about 30% of the IPO's issuance scale at that time.

The strategic placement of the three banks is mainly for large state-owned enterprises and Asset Management Co, and the major insurance companies are the main players in the strategic placement.

From the perspective of participation, a total of 23 institutions participated in the strategic placement of ICBC, with at least 14 institutions participating in the Bank of China and 20 participating in the Bank of communications.

Among them, since the strategic placement of Bank of communications was in April 2007, after the notice was issued, the ratio of strategic placement and the number of agencies participating in strategic placement were further standardized.

According to the notice of the time, the number of strategic investors should not exceed 20, and the total amount of shares allocated to strategic investors should not exceed 30% of the number of publicly issued shares.

It can be seen that the proportion of the strategic placement of the Agricultural Bank will not exceed 30%.

Without considering the excess placement option of A shares, the Agricultural Bank has no more than 22 billion 235 million shares, and its strategic placement can reach up to 6 billion 671 million shares.

If the excess placement option of A shares is fully exercised, the number of issued shares will not exceed 25 billion 571 million shares, and the number of strategic placing can reach 7 billion 671 million shares.