The mainland's largest property lender, China Construction Bank (CCB), raised US$8 billion in the world's largest initial public offering (IPO) this year, after it priced its shares at HK$2.35 apiece yesterday, close to the top end of the indicative range.

Analysts believe CCB will become a major market mover after its shares are traded in Hong Kong from next Thursday. They think CCB's share price will soar.

Lai Wai-ching, associate director of Hantec Investment Holdings based in Hong Kong, predicted that CCB's share price would rise by 5 to 8 percent in the short term, and has the potential to exceed HK$10 in the long term.

CCB, the first of the big four state-owned banks to be listed overseas, had earlier priced its IPO at between HK$1.9 and HK$2.4 when it sold 26.5 million H, or Hong Kong-listed shares, through the global offering. Among them, 1.32 billion shares, or 5 percent, were initially earmarked for retail investors in Hong Kong, with the rest for international offering, including some to CCB's strategic investors.

A spokesman for CCB declined to reveal subscription results, only saying the bank will release an official announcement next Tuesday.

It was reported that the international tranche as of yesterday attracted investment demand worth US60 billion from institutions and corporations, including Japanese investors and private banks.

Market sources have said the IPO's retail portion was more than 42 times over-subscribed, less than the 50 to 60 times level earlier estimated by Hong Kong brokerages. Sources close to the deal said the retail portion of the IPO was lifted to 7.5 percent from the initial 5 percent, even though demand was not as huge as expected.

"Retail investors are very careful about their investments these days as the stock market is sluggish," Lai said. "They are now more aware of valuation and margin costs."

However, Lai believes CCB's IPO was a good beginning and will encourage other mainland banks that are preparing for their overseas listings.

"I believe CCB, as well as other mainland lenders, have the potential to become investment darlings among local investors," Lai added.

According to CCB's prospectus, proceeds from the IPO would be used to strengthen the company's capital base in order to support growth.

The Bank of Communications was the first mainland bank to be listed overseas. Its shares were over-subscribed by more than 200 times earlier this year.

One of the largest commercial banks in China, CCB has about 14,250 branches. It has a nationwide base of approximately 68,000 corporate loan and discounted bill customers, and approximately 146 million active personal deposit accounts.

(US$1=HK$7.8)

(China Daily October 21, 2005)