Industrial and Commercial Bank of China
Industrial and Commercial Bank of China
Workshop III
International Business
BSA - 480
Industrial and Commercial Bank of China In October 2006, the Industrial and Commercial Bank of China (ICBC) completed the world 's largest initial public offering (IPO), listing shares on the Shanghai and the Hong Kong stock exchange, raising more than 21 billion dollars (Hill, 2011). The ICBC offered this IPO for numerous reasons, but foremost was that the ICBC wanted to attract investors with long term perspective; so it targeted foreign investors. Since ICBC already had a presence in 13 countries and regions globally, they understood that these foreign investments could help to reduce the entry barriers in various countries and other regions. Another reason the ICBC offered the IPO to foreign investors because they felt that this was the best way to improve its capital strength, capital adequacy, profitability and sustainability. The ICBC also realized that foreign investment is a great way to improve the bank 's balance sheets, risk management and modernize the bank 's various systems to compete with competition. To assist with this endeavor, Merrill Lynch & Co., China International Capital Corp., Credit Suisse Group, Deutsche Bank AG and ICEA Securities handled the global share offering. Underwriters for the domestic sale are China International Capital Corp., Citic Securities Co., Guotai Junan Securities Co. and Shenyin & Wanguo Securities Co (Chan, 2006). This proved to be extremely advantageous as the IPO was oversubscribed and proved to be a major success, enabling ICBC to raise the issuing price and raise billions more than they had initially planned. There were no disadvantages of ICBC offering this IPO. The main attraction of the ICBC IPO for foreign investors was the growing and profitable prospects of the ICBC. The ICBC was a state owned bank, and at the time was expanding itself in the US, European nations and Asia. The size of IPO, large asset
Workshop III
International Business
BSA - 480
Industrial and Commercial Bank of China In October 2006, the Industrial and Commercial Bank of China (ICBC) completed the world 's largest initial public offering (IPO), listing shares on the Shanghai and the Hong Kong stock exchange, raising more than 21 billion dollars (Hill, 2011). The ICBC offered this IPO for numerous reasons, but foremost was that the ICBC wanted to attract investors with long term perspective; so it targeted foreign investors. Since ICBC already had a presence in 13 countries and regions globally, they understood that these foreign investments could help to reduce the entry barriers in various countries and other regions. Another reason the ICBC offered the IPO to foreign investors because they felt that this was the best way to improve its capital strength, capital adequacy, profitability and sustainability. The ICBC also realized that foreign investment is a great way to improve the bank 's balance sheets, risk management and modernize the bank 's various systems to compete with competition. To assist with this endeavor, Merrill Lynch & Co., China International Capital Corp., Credit Suisse Group, Deutsche Bank AG and ICEA Securities handled the global share offering. Underwriters for the domestic sale are China International Capital Corp., Citic Securities Co., Guotai Junan Securities Co. and Shenyin & Wanguo Securities Co (Chan, 2006). This proved to be extremely advantageous as the IPO was oversubscribed and proved to be a major success, enabling ICBC to raise the issuing price and raise billions more than they had initially planned. There were no disadvantages of ICBC offering this IPO. The main attraction of the ICBC IPO for foreign investors was the growing and profitable prospects of the ICBC. The ICBC was a state owned bank, and at the time was expanding itself in the US, European nations and Asia. The size of IPO, large asset
References: Hill, C. W. (2011). International Business: Competing in the Global Marketplace (8 ed.). New York, NY: McGraw-Hill Irwin. Lynch, D. J. (2006). Chinese bank IPO expected to raise $19 billion. Retrieved June 15, 2012, from http://www.usatoday.com/money/world/2006-10-04-china-bank-usat_x.htm Chan, C. (2006, October 20). ICBC Completes Record IPO as Demand Tops $500 Billion (Update5). Retrieved June 17, 2012, from Bloomberg: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aWrKOcLNcHAc&refer=china