China Construction Bank IPO on track

China's Construction Bank, the country's top property lender, quashed talk of a delay in floating shares on global markets at the end of 2004 or early 2005, in what could be China's biggest IPO to date.
In an interview with Reuters, Construction Bank Chairman Zhang Enzhao, who heads the healthiest of the Big Four state lenders, also confirmed for the first time that the bank is seeking investment from Deutsche Bank, which is vying for a coveted mandate to underwrite its $5 billion to $10 billion IPO.
The biggest Chinese IPO so far is telecoms carrier China Unicom, which sold $5.25 billion of shares in 2000 before the tech bubble burst.
Speculation had raged that Construction Bank had hit snags on the road to an unprecedented, simultaneous listing in Hong Kong, New York and Shanghai, prompting market talk that rival Bank of China would beat it onto public stock exchanges.
People familiar with the deal said Construction Bank's IPO may be pushed into 2005, given the extent of restructuring required. Also, investor mania for mainland listings has waned after lacklustre showings by recent debutantes in Hong Kong.
"It will be this year or next year, there is no specific timetable. You've got to look at the state of the international markets," Zhang told Reuters, when asked if its IPO would be delayed.
"Deutsche Bank should be one of our targets. We really need to attract them," he said, referring to foreign strategic partners, on the sidelines of a banking forum in Shanghai.
Construction Bank and Bank of China are both courting strategic investors, which are sought not just for funds but to help the creaky state banks transform their business cultures.
China's big Beijing-run lenders are plagued by mountains of bad debt incurred over decades of non-commercial lending.
"There is clearly a requirement to beef up management talent and risk management systems. Running the bank on a commercial basis - that's where a strategic partner helps," said Fox-Pitt, Kelton banking analyst Sunil Garg.
China Construction Bank earned 15.8 billion yuan ($1.91 billion) in first-quarter profit before provisions, Zhang added, without offering a comparison.
He said the 50-year-old bank had not settled on an underwriter for the share sale.
Previously, sources said the bank had picked Citigroup, Morgan Stanley and China International Capital Corp, a joint venture between Construction Bank and Morgan Stanley.