Hong Kong’s biggest IPO is in the works

China Everbright Bank will IPO in Hong Kong before the year ends.

The nationwide joint-stock commercial bank whose parent firm, China Everbright, Ltd is state-owned, aims to raise a lower US$2 billion this year in contrast to the US$6 billion it initially targeted in 2011. If pushed through, China Everbright Bank's IPO will still be Hong Kong's largest this year.

Lin Li, vice-president in charge of the listing plan, said the bank plans to complete the IPO this year if there is a good market window.

“Despite the current market conditions and the fact that bank shares are undervalued, we think that from a broader financial perspective, it would be better to list than not to list.”

Analysts said China Everbright Bank is putting pressure on its underwriters to secure guaranteed commitments from investors to avoid a repetition of its aborted IPO last year.

China Everbright Bank is going against a trend that has seen a drastic reduction in the number of IPOs in Hong Kong. The city is now the fourth largest IPO market, from second in 2011.

China Everbright Bank hopes a presence in the Hong Kong market will help it expand its international business.

The bank will be the first Chinese lender to list in Hong Kong since Agricultural Bank of China in 2010. Analysts believe a China Everbright Bank IPO will be an important test of how international investors view Chinese banks.