Bank of China launched its online domestic initial public offering (IPO) today with shares trading at 3.08 yuan (38.5 US cents) per share.

 

The bank plans to issue 6.493 billion A shares to raise 20 billion yuan (US$2.5 billion), according to the bank's statement published in yesterday's Shanghai Securities News.

 

With more than 120 billion yuan (US$15 billion) already bid for offline subscriptions, it is predicted that the bank will receive around 800 billion yuan (US$100 billion) in online subscriptions.

 

The price is mid-range, within the 3.05 yuan (38 US cents) to 3.15 yuan (39 US cents) range set on June 19, and compares with the HK$2.95 (38 US cents) at which BOC sold shares to investors in its Hong Kong IPO last month.

 

"The price is lower than many analysts have predicted, leaving a wider space for the share price to grow later on," said Cheng Weiqing, an analyst with CITIC Securities.

 

"Institutional investors are rearranging their investment portfolio to prepare themselves for the subscription of BOC shares," he added.

 

Domestic investors have demonstrated a high passion for the country's largest IPOs so far after the bank said earlier that it planned to list its 20 billion yuan worth of A shares on the Shanghai bourse by July 5.

 

Insurance companies, financial companies and fund management companies are among the top three investors in BOC's offline subscription. Eight insurance companies subscribed offline to 624 million shares at a cost of 2 billion yuan (US$250 million).

 

Financial companies and fund management companies acquired 608 million shares and 603 million shares respectively.

 

These purchases accounted for 28.3 percent of BOC's public offering.

 

Earlier in the month, 20 percent or some 3.96 billion yuan (US$495 million) worth of BOC shares were placed with 14 domestic strategic investors, of which five are also insurance companies.

 

However, analysts doubted that BOC shares would jump as high as China CAMC Engineering Co Ltd when it begins trading in Shanghai on July 5.

 

China CAMC Engineering, the first company to go public after the year-long ban was lifted last month, drew 213 billion yuan (US$26.6 billion) in bids, raising 444 million yuan (US$55.5 million) to build irrigation works and fishing ports. Its shares jumped more than four times on their first day of trading on June 19.

 

(China Daily June 23, 2006)