China Everbright Bank targets more key investors for Hong Kong stock sale

The lender seeks to sell at least 40% to funds, companies or wealthy individuals as it is expected to list in Hong Kong on Aug. 18.

China Everbright Bank Co. is seeking more institutional buyers for its Hong Kong share sale after getting commitments for about one third of the offering from key investors, two people with knowledge of the deal said.

Prudential Plc and United Overseas Bank Ltd. (UOB) are among 12 so-called cornerstone investors who have agreed to buy about 30 percent of the 10.5 billion shares on offer, said the people, who declined to be identified because the information is private. The sale may raise about $5.3 billion, based on the lender’s closing price of 3.28 yuan (51 cents) in Shanghai on Thursday.

Everbright Bank’s underwriters are seeking to sell at least 40 percent of the stock to cornerstone investors, said the people. Such buyers, typically funds, companies or wealthy individuals, are offered guaranteed shares in an offering in exchange for pledges not to sell the stock for a fixed period.

The Beijing-based bank delayed the sale in June as shares of Chinese lenders declined on concern that loans made to local governments may turn sour. China Guangfa Bank Co., part owned by Citigroup Inc. (C), is among other financial companies planning to sell shares in Hong Kong, according to people with knowledge of the matter. Everbright Bank shares have lost 17 percent this year in Shanghai.

Officials at Everbright Bank, Prudential and United Overseas Bank were not immediately available to comment.

With demand for bank shares slackening, securing key investors may help ensure a deal gets done. Agricultural Bank of China Ltd. (1288) sold about 52 percent of the Hong Kong portion of its initial public offering to cornerstone investors in July last year, according to data compiled by Bloomberg. The Hang Seng Finance Index has dropped 6.9 percent since Dec. 31, the worst- performing industry group on Hong Kong’s benchmark.

View the full story in Bloomberg.

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