Chinese city commercial lender Jiangxi Bank Co. Ltd. has secured five cornerstone investors, including Citic Guoan Group Ltd. and FTLife Insurance Co. Ltd., ahead of its IPO in Hong Kong.
Jiangxi Bank is seeking up to HK$7.79 billion by offering 1.17 billion shares at HK$5.94 to HK$6.66 apiece, according to its filing with the Hong Kong stock exchange. The public offering started June 13 and will end June 19. Shares will begin trading June 26.
The cornerstone investors agreed to subscribe up to 649,091,500 shares, or about 55% of the offering, the filing said.
The largest cornerstone investor is Yango Investment Ltd., an investment vehicle owned by Chinese developer Yango Group Co., Ltd's founder, Lin Tengjiao, which agreed to invest HK$1.40 billion. It was followed by Citic Guoan, which agreed to invest HK$902.2 million. Shanghai-based Sinolending Fintech Co. said it would invest HK$784.5 million, ZhongHua Financial Holdings Ltd HK$392.3 million and FTLife HK$376.6 million.
According to the filing, the bank's 2017 net profit rose 73% to 2.91 billion Chinese yuan from 1.68 billion yuan a year earlier. Xu Jihong, vice president and board secretary, told reporters at a June 12 media briefing in Hong Kong that the earnings growth was due to the recovery of nonperforming assets and an increase in fee and commission income.
However, net interest margin has been declining since 2015. It stood at 2.26% as of end-2017, down from 3.05% as of end-2016 and 3.69% as of end-2015.
Xu said the company will review its branch network and increase the use of technology after the IPO to optimize its network and cut costs.
As of Dec. 31, 2017, the company had 278 retail outlets, including 13 branches and 262 subbranches, in Jiangxi province in southwest China. "The necessity of some branches is in question," Xu added.
Net asset of the bank was estimated at 370.00 billion yuan as of Dec. 31, 2017, the filing said.
As of June 12, US$1 was equivalent to 6.40 Chinese yuan.