ABC Tomorrow's Biggest IPO Hit

The SFC will review the first application of the Agricultural Bank of China Limited by Share Ltd (ABC) tomorrow (June 9th). The listing of ABC is likely to be the largest IPO ever.

ABC prospectus shows that Agricultural Bank of China intends to issue shares through A+H, and plans to issue no more than 22 billion 235 million shares of A shares, accounting for no more than 7% of the total share capital of A shares and H shares issued. If the option of allotment of shares issued by A shares is fully exercised, it will not exceed 25 billion 600 million shares, and its A+H shares will not exceed 56 billion 300 million shares, and the issue shares will be lower than the market expected.

In April 21st this year, the National Council of social security funds subscribed 10 billion new shares of Agricultural Bank of China for 15 billion 500 million yuan. If we refer to this price, ABC's net assets per share will be about 1.55 yuan.

Prior to authoritative sources, Agricultural Bank of China will issue price expectations again reduced to 1.6 times the market rate. This means that the price of Agricultural Bank of China is expected to be around 2.50 yuan per share.

According to the issuance of A shares up to 25 billion 570 million shares, the A share financing scale is only 64 billion yuan. If the issue price of H-shares is basically the same, the amount of H-share financing is up to 76 billion 700 million yuan. According to this calculation, the total A+H of the Agricultural Bank of China is about 140 billion yuan (about 20 billion 400 million US dollars). The A+H share financing expectations below the previous US $30 billion also failed to exceed the total amount of $22 billion raised in 2006 when ICBC (601398) was listed. But with a slight raise in the issue price, ABC can be the largest IPO ever.