BEIJING, (Reuters) – Several Middle Eastern sovereign wealth funds are holding talks with the Agricultural Bank of China about investing in its IPO in Shanghai and Hong Kong this year, the China Business News reported on Monday.
The Kuwait Investment Authority intends to invest about $1 billion to become a cornerstone investor in the Chinese bank’s $30 billion initial public offering, which would be the world’s largest IPO, the newspaper reported, citing a source at one of the underwriters.
The newspaper also said an institutional investor from the United Arab Emirates was holding talks, but it did not name the other sovereign wealth funds involved in the discussions.
AgBank, set to become the last of China’s big four banks to list its shares, has cleared a preliminary hearing with the country’s securities regulator, local media reported last week.
The bank received a $19 billion capital injection from Central Huijin, an investment arm of China’s sovereign fund, at the end of 2008. It also hived off 800 billion yuan ($117.1 billion) of bad loans to clean up its books in preparation for the listing.
China’s National Social Security Fund has invested 15 billion yuan ($2.20 billion), Ji Guoqiang, an official with the fund, said this month.
The fund hopes AgBank will list as soon as possible, Ji said, although big swings in stock markets locally and globally have cast some doubt over whether the bank might postpone its share issue to wait for market conditions to improve.
AgBank is expected to get regulatory approval for the IPO in early June, the China Business News reported on Friday, citing a banking source.
Another local newspaper, the Securities Daily, said last week that PetroChina, the country’s biggest oil and gas producer, could be brought on as a strategic investor for AgBank’s IPO.
If it does not bring on any foreign strategic investors, AgBank would be the only one among China’s “big four” banks to go public without doing so, underscoring how the global financial crisis has dented the reputation of some foreign banks in China.