September 24 (Beijing Time) - Petroleo Brasileiro S.A ("Petrobras"), the biggest listed company in Latin America in market value, raised USD 68.5 billion today through its global offering. The deal topped Japanese telecommunication firm NTT's USD 36.8 billion share sale in 1987 by 1.86-fold, and became the largest equity financing project in the world.
The offer was warmly received in the market and oversubscribed by more than twice (238%) the available amount. Encouraged by the good news, Petrobras' new common and preferred shares (ADR) closed 1.25% and 0.65% higher than the offering prices at USD 34.92 and USD 30.79 respectively on the first day of trading.
The offer was concluded successfully.
ICBC International, the wholly-owned investment banking arm of ICBC, has been successful in joining this significant global share offering by being appointed as the joint bookrunner. It also marks the stage achievement of ICBC's efforts of recent years to set for global advance. When discussing with Petrobras, ICBC saw the investment value of the company by keen sense of perception and set its sight on the opportunity to win Petrobras, especially in areas of commercial banking and investment banking.
In the end, backed by the extensive customer network and marketing strength of ICBC and ICBC International in Asia, particularity in China, ICBC International as the only investment bank with Asian background was invited by Petrobras to act as joint bookrunner for its IPO. This is the first time a Chinese investment bank has ever made its mark in the global capital market.
Other global names as the joint bookrunners for this deal included Morgan Stanley, Goldman Sachs, Citibank, N.A, Bank of America Merrill Lynch, Credit Suisse, HSBC and JP Morgan Chase.
ICBC International was formed in 2009. As a new member in Chinese investment banking, ICBC International has been successful in launching the road show for the Petrobras senior management in Asia and held sessions with the top investors, attracting many mainstream institutions including the global and Asian sovereignty funds.
The investors have vote of confidence in the growth potential of energy companies. Long-term investment in Petrobras can widen the investor base and improve the investor portfolio of the company. Investors showed strong interest in Petrobras' share sale. ICBC International kept an eye on the long-term investments from mainstream investors.
The final allocation rate reached as high as 75%, sailing far above the average of all allotted subscriptions.
Petrobras, one of the world's five largest oil companies, witnessed very fast growth in recent years. Petrobras has rich reserve in oil and gas resources to sustain its development. The IPO success this time creates much room for the company to grow in the long term and raise funds continuously. Being the only bookrunner from Asia, ICBC International brought Petrobras to Asia and let Asia know this leading company in South America and Brazil.
ICBC International at the same time offered an opportunity for the investors in Asia market to invest in such a world top oil company, helping Petrobras to achieve its fund-raising objective. In less than two years since inception, ICBC International came to the fore of the global capital market by taking the role of joint bookrunner to help Petrobras conclude the world largest equity financing project.
The deal has demonstrated the substantial strength of Chinese investment banks to serve top-tier customers in worldwide financial market and manifested the following far-reaching implications:
I. Petrobras has made full preparation for the offering and achieved win-win for the investors and issuers in this world's biggest share sale so far. In this secondary share offering, Petrobras built the books for a record period of as long as three weeks in order to collect every investment intention from the market and ensure full subscription from all around the world. In the end the offering prices were reasonable, priority was given to the top long-term investors worldwide, good after-market performance also gave satisfactory return to the investors.
II. ICBC International demonstrated its outstanding performance in Petrobras shares sale by taking advantage of the strong financial service platform and customer network of ICBC. ICBC International expanded Petrobras' investor base to a large extent by selling to sovereignty funds, QDII, large corporate clients, fund houses and high-net-worth investors. ICBC and ICBC International showed the way and evoked wide interest from the market to subscribe Petrobras' new shares by attracting top-quality investors.
III. Through this offering, ICBC and ICBC International act as the bridge between Asian investors and the Petrobras far away in Latin America's Brazil. Aided by its strong sales network to launch the sales campaign, ICBC and ICBC International bring together the Asian investors and Petrobras under one roof.
Petrobras was well-presented in Asia market while the Asian Investors earned a good investment opportunity. In terms of investment banking, ICBC capitalizes its substantial strength accumulated over years of progress to stand side by side with top global peers. In a little known success, ICBC gained full recognition from the international market.
During the course, ICBC took a step further towards its "Go Global" strategy.
IV. The strategic partnership between ICBC and Petrobras and the participation of ICBC International in this unprecedented share offering carry far-reaching implication to drive forward the trade and economic ties between China and Brazil. Brazil and China both are members of the "BRICs" representing the four strong emerging economies.
There is a high degree of trade complementarity between the two countries witnessed by the rapid growth of the bilateral trade in recent years. The two countries are important trade partners to each other. This large-scale fund raising of Petrobras is one item of Brazil's development strategy. ICBC pulls out all stops to participate and scores notable victories.
The greater mutual understanding as a result would permit a big push to the cooperation between ICBC and Petrobras and economic dimension of China-Brazil relation.
The participation in Petrobras IPO is a fruitful attempt of ICBC to escalate its global presence and achieve win-win for many parties. The successful debut of ICBC International is another demonstration of the Chinese investment banks who, with the support from the Motherland and parent bank, can compete on the same ground with the global names, join the multinational financial deal and act as the bridge between the capital market in China and the world.
Looking ahead, we will see more Chinese banks joining the fray amid the ever-changing global financial market. They will contribute their share to the global economy and the steady progress of financial sectors across the world.
Background:
ICBC is the most profitable bank in the world with the largest market capitalization and the largest customer deposits balance. ICBC offers all-inclusive financial products and services to more than 3.6 million corporate clients and over 200 million personal customers through a network of 16000+ branches in China and overseas, and 1500+ correspondent banks across the world. In recent years, ICBC strides boldly on the world stage through its internationalization drive and diversified strategy. Today, ICBC is the most active, most successful Chinese commercial bank in overseas capital operation. The capability of ICBC in offering global services is significantly enhanced.
Hong Kong-headquartered ICBC International is the wholly-owned investment banking unit of ICBC, also the only platform for ICBC to provide a full spectrum of investment banking services. ICBC International continues to act on its principle as "The Best Team, The Best Platform, The Best Services", stays relevant by innovation and gathers speed in many business areas of investment banking, capital market, asset management and investment management.
ICBC International comes seventh in the HK ranking of IPO underwriting volume just within the first year since inception in 2009. In 2010, ICBC International catches widespread attention by concluding numerous IPO and secondary offering projects, namely: A+H shares placement of ICBC, A+H shares placement of Bank of China, West China Cement Limited, Trony Solar Holdings, Brightoil Petroleum (Holdings) Ltd, Petrobras and AIA Group.
Petrobras, a Brazilian state-owned company, is a world leading company in the exploration and production of oil and gas. Petrobras owns 95% of Brazil's oil reserves and produces 90% of oil in the country. Petrobras is a world leader in development of advanced technology for deep-water and ultra-deep water oil exploration and production.
To realize its ambitious goal of turning into a major oil production company, Petrobras plans to invest USD 224 billion in the coming five years to tap Brazil's massive offshore oil reserves, raising oil production from current 2 million barrels a day to 4.2 million barrels by 2020. The proceeds will be used for acquiring the exploration and mining rights from Brazilian Government on 5 billion BOE (Barrel of oil equivalent) of crude oil, and for Petrobras' capital expense.
