CCB to raise $7.5b this month

Construction Bank to Sell About $7.5 Billion of Stock (Update1)
By Luo Jun

Sept. 4 (Bloomberg) -- China Construction Bank Corp., the nation's second-largest bank, may sell shares valued at $7.5 billion as early as this month in what would be the world's second-biggest stock sale this year.

The listing committee of China's securities regulator will meet Sept. 7 to review the Beijing-based bank's plan to sell as many as 9 billion shares, according to documents posted on the watchdog's Web site late yesterday. Companies in China typically sell stock within a month of getting regulatory approval.

The government wants to boost the supply of equities on China's two exchanges to increase options for investors who can't easily buy stocks abroad, and to cool gains in a market that has more than doubled this year. China's state-owned banks listed in Hong Kong have led the push, raising $13.4 billion at home in the past year.

Construction Bank didn't disclose how much it plans to raise. Bloomberg News calculated the amount by multiplying the number of shares on sale by yesterday's closing price of HK$6.51.

Shares of Construction Bank have gained 37 percent since it first announced a domestic stock offering plan on June 15. The company is the last among the five Hong Kong-listed Chinese banks to sell so-called A shares in China.

China's benchmark CSI 300 Index surged 159 percent this year, making it the world's best-performing and most expensive primary index. Domestic investors have opened 33 million accounts trading stocks and mutual funds, six times the total for 2006.

Lending Boom
Chinese banks are selling shares to bolster their finances, allowing them to extend more loans and fuel the nation's economic expansion. The central bank forecasts the economy may grow 10.8 percent this year, the fastest pace since 1995.

Construction Bank, established in 1954 to fund roads, bridges, dams and other infrastructure, is now the country's largest mortgage and real-estate lender. It provides 22 percent of the nation's mortgages and about 13 percent of overall loans.

The company's profit jumped 47 percent in the first half from a year earlier on more lucrative lending and increased fee- based services. The bank's bad-loan ratio of 2.95 percent at June 30 was the lowest in China's four largest state banks.

Bank of America Corp., which paid $2.5 billion yuan ($331 million) for a 9 percent stake in Construction Bank in 2005, will see its holding diluted to 8.2 percent, according to the prospectus. Central Huijin Investment Co., a government investment arm, will control 59.1 percent of the bank.

Citic Securities Co., the country's most profitable brokerage, China International Capital Corp., part owned by Morgan Stanley, and China Cinda Asset Management Corp. will manage the share sale.