ACGBF Agricultural Bank of China (PK)

China International Capital Corp., the Chinese investment-bank partly owned by KKR & Co., has cut the size of its planned initial public offering in Hong Kong to US$800 million from the $1 billion it was initially looking to raise last month, people with knowledge of the deal said Tuesday.

CICC, which made its name over a decade ago as the bank that helped take many state-owned firms public, has decided to raise less to reflect the slump in Chinese brokerage stocks since the country's market rout in June, one of the people said. For example, Huatai Securities Co.'s stock is down 29% since it raised US$5 billion in a May IPO that was one of the world's biggest this year.

Stock markets more broadly remain weak since the market rout: Hong Kong's benchmark Hang Seng Index, which is dominated by Chinese companies, is down 19% from its April peak, while the Shanghai and Shenzhen markets are down around 35% from their June highs.

CICC could start taking orders from investors as early as next Monday and price its IPO on Oct. 30, with listing slated for Nov. 9, according to two people with knowledge of the deal. It wasn't immediately clear how much of the IPO will go toward cornerstone investors, or investors that commit to holding the stock for a period after it goes public.

CICC's planned IPO is coming to market at a time when a couple of other big Chinese companies are also tapping investors. State-owned debt-clearing agency China Huarong Asset Management Co. is seeking up to US$2.5 billion from its Hong Kong IPO, but has already managed to lock in orders for over 70% of its IPO at the bottom end of its price range from government entities including monopoly grid-operator State Grid Corp. China's biggest reinsurer China Reinsurance (Group) Corp. is also preparing to go public, having just raised US$2 billion from investors after pricing its pending float at the top of a range.

CICC is likely to price its deal at 1.2 time book value, according to the people with knowledge of the deal, which puts it at a discount to rivals including the country's biggest investment bank and brokerage, Citic Securities Co., which is trading at 2.6 times price-to-book.

The planned listing of CICC will give its shareholders, including private-equity firms KKR & Co. and TPG Capital, the chance to exit their investments despite the turmoil in Chinese stocks.

Central Huijin Investment Ltd., the domestic investment arm of China's sovereign-wealth fund, is the largest shareholder in CICC with a 43.35% stake. Singapore's sovereign-wealth fund GIC Pte. Ltd. holds 16.35%, while TPG Capital owns 10.3% and KKR 10%, according to its annual report.

CICC was formed in 1995 by Morgan Stanley and China Construction Bank Corp. as China's first Sino-foreign joint-venture investment bank. Morgan Stanley sold its stake in December 2010 to a consortium that included KKR, TPG, GIC and Great Eastern Holdings Ltd., the insurer controlled by Singapore's Oversea-Chinese Banking Corp. It has offices in Hong Kong, New York, London and Singapore.

CICC is a sponsor, or the bank responsible for the IPO, on its own float, as is ABC International, the investment banking unit of the Agricultural Bank of China Ltd., one of the country's top four banks.

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(END) Dow Jones Newswires

October 20, 2015 06:25 ET (10:25 GMT)

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