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AgBank Readies $23 Billion IPO

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bank_1 June 15, 2010 (Chinavestor) The Agricultural Bank of China is preparing to raise $23 billion through an initial public offering that will be the world's largest and list the bank's shares in both Hong Kong and Shanghai.

AgBank was founded by the dictator Mao Zedong in the 1950s. Some estimates had put the value of the IPO as high as $30 billion, but recent declines in Chinese equity markets have resulted in a lower offering price.

On Monday, Xinjiang Goldwind Science & Technology Co. scuttled plans for a $1.2 billion IPO. The Hong Kong portion of the AgBank offering sought to raise up to US$14.4 billion, according to the China Post. That includes a 15% over allotment. The Hong Kong portion offering is expected to equal 53% of the IPO.

Industrial and Commercial Bank of China (HKG:1398) previously held the record for the largest IPO, raising $21.9 billion in October 6, 2006. The first successful large bank IPO belongs to Bank of Communication (BoComm) (HKG:3328), where HSBC Plc. (NYSE:HBC) locked in a 20% stake at a significant discount back in June 2005. Bank of China (HKGF:3988) can next a year later, raising as much as $11.2 billion in June 2006.

IPO of Agriculture Bank of China will be different from previous mega bank IPOs in a sense that no major foreign financial institution will underwrite the max. allowed 20% stake. It is a proof that China doesn't need foreign capital nearly as much as back in 2005 and 2006.

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AgBank, China's third-largest bank, has 24,000 branches. The Hong Kong-listed shares are expected to debut on July 16.



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