China's national pension fund invested more than 15 billion yuan ($2.2 billion) to become Agricultural Bank of China's third-largest holder, paving the way for what may be the world's biggest initial public offering.
The National Council for Social Security Fund has made a “long-term, strategic investment” and wants the bank to sell shares as soon as possible, Ji Guoqiang, head of the fund's equity investment department, said at a forum in Beijing today.
Agricultural Bank, the nation's third-largest lender by assets, may raise $26 billion from the sale of shares in Shanghai and Hong Kong, the Economic Observer reported on May 10. That would be more than the record $22 billion raised by Industrial & Commercial Bank of China Ltd. in 2006 and complete a decade-long overhaul of China's state banks.
“The bank is speeding up the IPO to get a head start as all rivals plan to raise capital,” said She Minhua, a Shanghai- based analyst at Haitong Securities Co. “The timing may not be ideal for a mega sale like this as equity markets are showing signs of weakness.”
China's Shanghai Composite Index has fallen 4.2% this week on concern the European crisis may slow China's exports to a market that makes up more than a fifth of its overseas sales. The gauge has lost 21% this year after entering a bear market last week, the first among the world's 10 biggest exchanges in 2010.