Temasek to Invest up to $300m in Massive Planned AgBank IPO

Singapore/Hong Kong. Singapore’s state investment fund Temasek plans to invest up to $300 million in the Agricultural Bank of China, ahead of its roughly $20 billion IPO, a source with direct knowledge of the matter said over the weekend.

Temasek’s commitment to China’s third largest bank is a positive step for the offering, though it is less than the $1 billion that AgBank’s underwriters are hoping to get from Middle East and Asian sovereign wealth fund investors.

So-called cornerstone investors are a key layer of financial backing for an IPO. AgBank’s Shanghai-Hong Kong listing will be the world’s largest ever IPO if it exceeds $21.9 billion.

Temasek declined to comment. AgBank could not immediately be reached. The source was not authorized to speak on the record about the deal.

Temasek, as well as sovereign funds from Kuwait and Qatar are expected to sign onto AgBank’s offering.

The Beijing-based bank, founded in 1951 by Mao Zedong as the rural unit of the central bank, is still known as having a customer base spread across China’s far-flung parts, though it does a have a major presence of most of the country’s large cities.

AgBank today boasts nearly 24,000 branches and employs more than 441,000 people, eclipsing Industrial and Commercial Bank of China and China Construction Bank, the world’s two biggest banks by market value.

If AgBank raises more than the $23 billion it hopes, it will be the world’s largest ever IPO, beating out ICBC’s $21.9 billion dual listing in 2006.

AgBank is China’s third largest bank, with $1.4 trillion in assets. It also has 320 million customers, a base larger than the population of the United States.

The IPO is expected to price on July 7, with a debut the following Thursday or Friday.

Normally, cornerstone investors are locked in for six months, but with the scale of AgBank’s IPO, underwriters are pushing for a one-year commitment, which will help add confidence to institutions seeking longer term returns from the offering.
 

Reuters