China’s Agriculture Bank IPO targets $28bln

Lender kicked off the pre-marketing process for the $10bln-$15bln from Hong Kong and $8.9bln-$13bln Shanghai IPO.

Agricultural Bank of China Ltd. Monday kicked off the pre-marketing process for an initial public offering in Hong Kong and Shanghai that could raise as much as US$28 billion and could still be the world's largest, despite slightly trimming the US$20 billion to US$30 billion range the lender had earlier expected to reap from the deal.

The bank plans to raise US$10 billion-US$15 billion from the Hong Kong portion of its IPO, according to a term sheet seen by Dow Jones Newswires Monday. Based on the allotment ratio it has set for the Shanghai and Hong Kong portions, the Shanghai portion in this case could raise between US$8.9 billion and US$13.0 billion.

This suggests a slight drop of the entire offering to a total of between US$18.9 billion and US$28.0 billion. A spokeswoman for AgBank couldn't be reached for comment Monday.

The pre-marketing, or investor education process, could determine if AgBank's IPO will be the world's biggest since Industrial & Commercial Bank of China Ltd., a fellow Big Four state-run Chinese bank, raised a record US$22 billion in 2006.

AgBank has long been considered the weakest of China's big banks with a bigger legacy of bad loans that delayed its coming to market. But as the last of China's Big Four banks to list, it offers a rare opportunity for those investors still willing to bet on China's long-term growth.

The deal comes at a choppy time for markets, with weak appetite for new deals forcing some IPOs to be pulled and while China's banks plan to raise around $70 billion in coming months to replenish their capital after a lending binge last year.

View the full story in the Wall Street Journal.