China Minsheng to raise $4.5bn through shares and bonds

An analyst believes that the move is more likely to be accepted by investors than an earlier Shanghai private placement fundraising scheme.

China Minsheng Banking Corp., the nation’s first non-state lender, said it plans to raise as much as 29.4 billion yuan ($4.5 billion) by selling shares and convertible bonds to boost its capital adequacy ratio.

The bank will issue up to 20 billion yuan ($3.04 billion) of convertible bonds in Shanghai and has canceled a plan to issue local- currency shares in a private placement, according to a filing to the Hong Kong stock exchange on Friday. Minsheng will also issue as many as 1.65 billion new H-shares in Hong Kong, the statement said. Based on Thursday’s closing price of HK$6.72, that may raise as much as 9.35 billion yuan ($1.42 billion).

The proceeds “will be used for replenishing of the core capital of the company, increase the capital adequacy ratio, strengthening the company’s ability of resisting risks and gaining profits and ensuring the sustained, rapid and sound development of the business,” Minsheng said in its statement.

Chairman Dong Wenbiao is trying to bolster a capital adequacy ratio that’s the second lowest among nine Chinese banks traded in Hong Kong. The lender scrapped a plan to raise 21.5 billion yuan ($3.27 billion) in a private placement in Shanghai because of opposition from small shareholders, a person with knowledge of the matter said on Friday.

“The new plan is more likely to be accepted by investors and can sustain Minsheng’s growth for at least three years,” said Li Wen, a Beijing-based analyst at Donghai Securities Co. “Demand for convertible bonds, especially from fixed-income funds, is quite strong.”

View the full story in Bloomberg.