Citigroup, Morgan Stanley chasing China IPOs

BEIJING: Citigroup Inc and Morgan Stanley are among Wall Street firms vying this week for about US$6bil of initial share sale business in China, more than what the nation sold in all of 2003.  

The government would be choosing banks to manage a US$5bil initial public offering (IPO) by China Construction Bank, the nation’s third largest lender, and a US$1bil offering by China Power International, bankers competing for the business said. The two IPOs are expected to generate about US$210mil in underwriting fees.  

Chinese companies including Air China and Ping An Insurance Co may raise US$15bil in total this year, up from US$5.7bil in 2003. The target is 30% higher than the global IPO total in the first half of last year and would generate US$525mil in fees, drawing visits to Beijing by Citigroup chief executive Charles Prince and JP Morgan Chase & Co’s William Harrison.  

“There are so many sales going on in China, it’s like drinking from a fire hose for the bankers,” said David Chapman, who helps manage US$650mil at Towry Law Asia HK Ltd in Hong Kong. “China has enough assets for sale to keep investment bankers very busy for the next decade or two.”  

The Chinese government has sold about US$63bil of state assets since 1992 and may double that figure in the next decade as part of a plan to end 50 years of centrally controlled industry as it opens up to overseas competition.  

Citigroup, Deutsche Bank AG, HSBC Holdings Plc, JP Morgan and Merrill Lynch & Co are among the banks competing for a role in the China Construction Bank IPO. – Bloomberg 

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