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Shanghai (AFP) July 1, 2010 Shares from the mainland portion of Agricultural Bank of China's world-beating initial public offering were expected to sell near the top of their range, analysts said Thursday. AgBank, which plans to raise 23.2 billion dollars in a dual listing, started taking orders from institutions Thursday for the Shanghai part of its float, a day after its Hong Kong shares were reportedly oversubscribed by up to tenfold. "There is large chance that the (mainland) A-share portion of the IPO will be priced at the top end of the price range. The offering was 16 times oversubscribed in pre-marketing," Hengtai Securities analyst Lu Yi told AFP. The portion of Hong Kong shares for institutional investors appeared to have been fully taken up on the first day and was six to 10 times oversubscribed, Dow Jones Newswires reported, citing sources familiar with the issue. Emerging markets bank Standard Chartered said Wednesday it will invest 500 million dollars in AgBank's flotation in Hong Kong to strengthen its presence in China. Shenyin and Wanguo Securities strategist Gui Haoming told AFP that subscriptions would be more attractive to institutions because they were being offered at a lower than expected price. "The price is obviously lower than what was offered by underwriters and lower than the 2.7-yuan (0.398 dollar) median price in pre-marketing," Gui said. He said the price range set for AgBank shares was about 10 percent below those of two of its listed fellow "Big Four" banks, the Industrial and Commercial Bank of China (ICBC) and China Construction Bank. Analysts said the IPO has been impacted by China's weak stock market, one of the worst performers among the world's major bourses in the first half of the year with slide of almost 27 percent. Despite the strong institutional interest in AgBank, the retail portion of the subscription received a lukewarm response from Hong Kong retail investors on Wednesday. Retail investors subscribed to 64.4 million dollars worth of AgBank shares through margin financing, accounting for 11.3 percent of the Hong Kong retail tranche, according to three brokerages polled by Dow Jones. Chinese mainland retail investors have to wait until Tuesday to subscribe and trading begins July 15. AgBank, the last one of China's "big four" state banks to go public, was founded in 1951 to lend to the rural poor but Beijing aims to transform it into stock market darling with the dual float in Shanghai and Hong Kong. The bank could raise as much as 13.1 billion US dollars from the Hong Kong offering, if the over-allotment option is fully exercised, based on the top end of a price range of 2.88-3.48 Hong Kong dollars (37-44 US cents) a share. It plans to raise as much as 10.1 billion dollars in Shanghai, after setting a price range of 2.52-2.68 yuan (37-39 US cents) a share.
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