Published: Sunday, 8 Nov 2009 | 10:51 PM ET

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China Minsheng Banking Corp, the country's seventh-largest bank, plans to raise as much as $4.07 billion after setting a price range for its November Hong Kong listing, according to a term sheet obtained by Reuters on Sunday.

AP

Minsheng, which is already listed in Shanghai, was the first listed non-state lender in China, and has never received government support in terms of carving out bad assets.

Most of China's listed banks' controlling shareholders are the government or state-owned enterprises, while Minsheng has an almost zero government holding.

The mid-size lender, which will kick off a formal marketing roadshow on Monday, is offering 3.32 billion shares, or 15 percent of its enlarged share capital. There will be a greenshoe option to increase the issue by an additional 15 percent, or 498 million shares, the term sheet said.

Minsheng's IPO move came after the Beijing-based lender failed to launch its Hong Kong IPO at least twice in the past few years due mainly to unfavourable market conditions.

At a proposed price range of between HK$8.50 and HK$9.50 per share, Minsheng Bank is valued at 1.67 to 1.8 times 2010 post-shoe basis book value estimated by joint bookrunners, a source close to the deal said.

By comparison, its peer Bank of Communications, China's number-fifth lender, trades at about 2.17 times 2010 book value, while China Merchant Bank and CITIC Bank trade at 2.75 times book and 1.66 times book value, according to a UBS research report.

Minsheng Bank's shares ended Friday trade in Shanghai at 8.13 yuan, up about 0.5 percent.

The lender has pledged five cornerstone investors, including Chinese Estates Holdings, China Overseas Finance Investment, Ping An of China Asset Management (Hong Kong), for a combined $340 million worth of shares.

UBS, BOC International, China International Capital, Macquarie and Haitong Securities are handling Minsheng's deal.

The bank will start its Hong Kong public offering on Nov 13, and plans to set final pricing for its share sale on Nov 18, and is scheduled to make its Hong Kong market debut on Nov 26.

UBS estimates the lender's earnings to jump 53 percent to 12 billion yuan in 2009, including a 4.9 billion yuan one-off pre-tax disposal gain on selling Haitong Securities <600837.SS> and a further 20 percent to 14.5 billion yuan in 2010.

Minsheng has about 70 percent of total operating income generated from corporate banking, which is also about 55 percent of total assets in first half of 2009. The lender aims to strengthen its retail banking by expanding loans to micro-enterprises.

The bank, which targets on private enterprises, micro-businesses and high-end retail customers, forecasts its 2009 net profit to be at least 11 billion yuan.

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