Zheshang Bank Co. Postpones Gauging Demand for $1 Billion Hong Kong IPO

By Staff Writer

Mar 01, 2016 07:09 PM EST

After winning the approval from Hong Kong's stock exchange for an initial public offering, lender China Zheshang Bank Co. decided to postpone the gauging demand for a $1 billion Hong Kong initial public offering. This happened after some stock buyers stated trouble in shifting cash out of mainland China.

Based on the information from Daily News, the deal arrangers were informed by potential major investors that they couldn't get timely regulatory approval to send cash throughout the border. The lender, based inside the eastern Chinese metropolis of Hangzhou, had initially planned to begin on Monday what is referred to as the pre-marketing of the deal.

According to Bloomberg, any barrier on cash outflows may hurt the Hong Kong market, in which the amount raised from first-time share sales rose 13 percent last year to $33.9 billion. Many corporations listed in Hong Kong allocate greater than half their IPO shares for chiefly Chinese major investors, who usually conform to keep on to their stock for six months in exchange for early and warranted allocation.

Philippe Espinasse, the previous head of Asia equity capital markets at Nomura Holdings Inc., said, "If the market stays unstable and Chinese cash can't get out, this means that it's going to be hard to get any widespread IPO executed." The writer of "IPO: A worldwide manual" also added that "A large proportion of the cornerstone buyers for Hong Kong IPOs in recent times are Chinese investors."

During the final 12 months, the three Chinese banks that went public in Hong Kong bet on mainland China major investors and their associates for an average 44 percent of their IPO size. The latest info stated that Zheshang bank hasn't set a brand new timetable for its offering, according to sources.

A Hong Kong-based external spokeswoman for Zheshang financial institution said she wasn't able to immediately respond about the delay. At the same time, representatives for China's State Administration of Foreign Exchange didn't answer right away phone calls searching for comment.

People acquainted with the matter said last month that China is narrowing early purchases of foreign currency for overseas investments, and regulators have requested a few banks to strengthen their control of foreign-exchange operations.

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