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Guangzhou Rural Commercial Bank hires firms to handle Hong Kong IPO

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Guangzhou Rural Commercial Bank hires firms to handle Hong Kong IPO

has hiredfour firms to manage a Hong Kong IPO that may fetch as much as US$1.5 billion,according to three people familiar with the situation.

Thebank mandatedABC International HoldingsLtd., CCBInternational (Holdings) Ltd., China International Capital Corp. (Hong Kong) Ltd. andChina Merchants Securities (HK)Co. Ltd. to arrange aHong Kong sharesale.

Thelender aims to list its shares in the city bythe end of this year, one of the people told S&P Global Market Intelligence. The company could not be reached immediately for comment.

The Wall Street Journal, citing unnamed people, in Maybroke the listing plan, while GlobalCapitalon July 20 reported the appointment of lead managers.

GuangzhouRural Commercial Bank mayraise US$1 billion to US$1.50 billion, assuming it sells 25% of stock near bookvalue, a common valuation for Chinese commercial banks going public, one of thepeople said. The lender had 35.70 billion yuan, or about US$5.5 billion, in netassets as of the end of 2015.

A HongKong IPO would make GuangzhouRural Commercial Bank thesecond Chinese rural lender to tap the city's equity market, after raised HK$10.12 billion innet proceeds therein 2010.

Banksin China, particularly smaller ones, are seeking ways to build capital buffers astighter Basel IIIrules loom. Nonsystemically important lenders in the country must have aminimum capital adequacy ratio of 10.5% from 2019.

GuangzhouRural Commercial Bank'scapital adequacy ratio dropped to 12.76% as of the end of 2015 from 14.45% ayear earlier, as nonperforming loans swelled and net profit declined.

As of July 22, US$1 wasequivalent to 6.68 Chinese yuan.