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Minsheng to raise US$3b by share sale

(Shanghai Daily)
Updated: 2007-02-08 09:01

China Minsheng Banking Corp, the nation's only non-state lender, plans to raise as much as 23.8 billion yuan (US$3.1 billion) selling shares to select investors to strengthen capital as loans soar.

Minsheng will sell 2 billion shares to no more than 10 existing and new institutional investors next week, it said in a statement to the Shanghai exchange. The stock will be priced at no less than 3.825 yuan, or 90 percent of the 20-day average price before July 17, when the sale was first approved. Minsheng's shares closed at 11.92 yuan yesterday.

The stock has almost tripled since the sale was approved, allowing Minsheng to cut the offer size from 3.5 billion shares to protect existing owners from additional dilution. Minsheng, whose loans grew about 60 percent a year between 2001 and 2005, is seeking to raise its capital adequacy ratio to comply with a regulatory minimum and avoid having to slow lending.

"We are buying Minsheng's growth," said Xu Xiang, who manages 1.5 billion yuan at Yinhua Fund Management Co in Shenzhen, which held 29 million Minsheng shares as of June 30. Xu said he's considering applying for more stock.

Any single investor can order a maximum of 600 million shares and those who commit to holding the stock for a longer period will have priority in purchasing shares.

Temasek Interested

Minsheng's shares rose as much as 4.5 percent today and traded at 12.39 yuan at 10:22 am in Shanghai. The stock has dropped 11 percent since closing at a record 13.98 yuan on January 29.

"We believe the target of raising about 10 billion yuan could be met at the current price level with smaller number of new shares," Liu Minwen, director of Minsheng Bank's corporate finance department, said in a phone interview. "The proceeds will be used to beef up capital and sustain loan growth."

Temasek, a US$65 billion Singapore government fund, is interested in raising its stake in Minsheng by buying some of the new shares, Tow Heng Tan, a senior managing director in Temasek's strategic development department, said last year.

Sichuan New Hope Investment Co, the largest shareholder in Minsheng Bank, said in a statement today it is "actively" seeking to buy into the placement.

Minsheng, founded by 59 private corporate investors who each own less than 10 percent, carved out a niche lending to small- and medium-sized private companies. The 10-year-old lender has had fewer problems with bad loans and fraud than rivals.

The bank on January 21 said 2006 profit increased about 40 percent, citing preliminary figures. Minsheng had 2.7 billion yuan in net income in 2005.