In an announcement, ICBC (Stock code: 601398) started the rights issue of A shares and H shares. ICBC will allocate 0.45 shares per 10 shares to all shareholders to subscribe. The allocation ratio is the same for A shares and H shares. ICBC is offering 11,293,305,662 A shares at RMB 2.99 per share and 3,737,542,588 H shares at HKD 3.49 per share. The two rights offer prices are the same after adjustments on the exchange rate.
ICBC expects to raise not more than RMB 45 billion. After deducting the necessary offering fees, proceeds from the rights issue will be used to increase the capital, to boost ICBC's competitiveness, level of risk aversion and sustainable profitability.
Since it's restructuring and going public, ICBC has maintained relatively fast pace of earnings growth despite the complex business and economic conditions. The compound annual growth rate of ICBC after-tax profit reached 37.4% during 2006-2009. ICBC is one of the fastest growing among the big banks in the world.
During the first three quarters of this year, growth of ICBC continued to gather pace. This fully reflects the strength of ICBC business model and development mode to counter economic fluctuations, and the stability and sustainability in its profit growth. The proceeds from the rights issue will be used to shore up ICBC's capital base and prepare for further business growth and development.
In this rights issue, A shares are sold at RMB 2.99 each, a 36.92% discount to its closing price of RMB 4.74 on Nov 10. H shares are sold at HKD 3.49 each, representing a 47.36% discount to its closing price of HKD 6.63 on Nov 10.
ICBC received the approval from China Securities Regulatory Commission on November 9 and 10 for the A-share and H-share rights issue respectively. Two placement schemes have been adopted by the ICBC Shareholder's General Meeting, A Shareholders Class Meeting and H Shareholders Class Meeting on September 21 and approved by the China Banking Regulatory Commission on September 29. Earlier, Ministry of Finance and Huijin Investment Co. Ltd have issued commitment in September to subscribe to all the rights shares to be offered by ICBC in cash in proportion to the stake they held.
The rights record date for A shareholders is November 15, payment dates from November 16 to 22 for 5 days. Result will be announced on November 24, A shares issued in this placement will be traded on November 30. A shares investors who wish to understand further details and the importance of this offering to ICBC can attend the online road show on November 12, ICBC executives from related department will be online to answer the questions.
The ex-dividend date for H shares placement is November 22. The rights record date for H shareholders is November 26. The prospectus, provisional allotment letter, application form for H shares over-subscription will be sent on November 29. ICBC H-share rights will be traded between December 1 and 13. H shareholders can subscribe between November 30 and December 16. Result of acceptance and over-subscription applications will be announced in the evening of December 23. H shares issued in this placement will be publicly traded on December 28.
