Central Huijin Investment Co Ltd, a subsidiary of China
Investment Corp (CIC), said it will buy a 70.92 percent stake in
China Everbright Bank (CEB) at 1yuan per share.
Central Huijin will take control of CEB, China Everbright
Group's banking unit, with a 20 billion yuan capital injection by
the end of this month.
The bailout will lift CEB's core capital adequacy ratio to above
5 percent and pave the way for the entry of strategic investors,
allowing the bank to hold an initial public offering (IPO) in Hong
Kong and on the mainland A-share market.
"The restructure plan will be further discussed by and is
subject to approval from the board and shareholders," Tang
Shuangning, chairman of China Everbright Group, a State-owned
financial conglomerate, said yesterday. "We expect to finish the
meetings next week and most likely the plan will be passed by the
board and shareholders."
The bank is also preparing to introduce strategic investors
ahead of a planned Hong Kong listing this year or early next year,
Tang said.
Earlier media reports said the bank could raise at least US$1
billion in its IPO.
The lender is a target for foreign investors given its low share
price and scale in the country.
"We will reserve a 20 percent stake for foreign strategic
investors and we would like to select investors who can hold a
stake in the bank for a long time," said Lin Li, a board member of
China Everbright Group.
The bank has hired China International Capital Corp and Morgan
Stanley to find one to three strategic investors, but asset
restructuring is a stumbling block for the process.
Bad assets and the lender's complicated shareholding structure
have made the bank's restructure a difficult process.
The bank is 24.16 percent-owned by China Everbright Group and
21.4 percent-owned by Hong Kong-listed China Everbright Ltd.
The bank's non-performing loans ratio stood at over 6 percent at
the end of 2006. Its net profit was 3.97 billion yuan at the end of
September.
(China Daily November 8, 2007)
