Everbright talks signal year-end listing

China Everbright Bank, which received the go-ahead for a listing from the Hong Kong stock exchange late last month, held a meeting with its syndicate bankers in Beijing yesterday, two people familiar with the deal said, prompting speculation of a year-end listing that would raise up to US$4 billion.

The medium-sized lender, based in Beijing, is making its third attempt to complete a long-planned H-share sale by issuing 12 billion shares after Huishang Bank, a newly listed city commercial bank that raised US$1.2 billion this week, made a positive debut amid solid support from a consortium of cornerstone investors.

"Timing of Everbright's IPO has yet to be confirmed as the final call very much depends on Everbright's share performance in Shanghai," said a Beijing-based banker who declined to be named. "Everbright is ready to go for a listing at anytime, while downbeat market sentiment looms after China's highly anticipated third plenary meeting offered little clarity over the country's economic reform."

Shares of Shanghai-listed Everbright have fallen 8 per cent this year, with a current price-book ratio of 0.86 per cent. The shares' inexpensive valuation has been one of the lender's major challenges in launching the H-share deal because its publicly traded stocks are below the official requirement of at least one times book value.

Meanwhile, shares of listing hopefuls generally offer a discount of 15 per cent to their industry rivals, creating a psychological buffer for investors after more than half of the newly listed firms traded below their offer prices.

"With a genuine discount on Everbright's A shares, valuation of its H-share stocks looks a big bargain, which may be a positive sign to launch the deal," a syndicate banker said.