UPDATE: Standard Chartered To Invest $500M In AgBank's IPO

30th Jun 2010 08:55

(Adds detail.) By Kaveri Niththyananthan and Patricia Kowsmann Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Standard Chartered PLC (STAN.LN) on Wednesday confirmed that it will invest $500 million in Agricultural Bank of China Ltd.'s (601288.SH) floatation in Hong Kong, as it strengthens its position in Asia. "This investment is a natural next step in our long-standing relationship and it underpins our recent agreement to develop business together," Standard Chartered Chief Executive Officer Peter Sands said in a statement. "China is a key market for us and our partnership is a strong symbol of our commitment there." AgBank's initial public offering could be one of the world's largest listings, aiming to raise as much as $23.6 billion in IPOs in Hong Kong and Shanghai. U.K.-based but Asia-focused Standard Chartered will invest on the Hong Kong IPO as a so-called cornerstone investor, agreeing to buy a stake at the IPO price and not sell shares for six to 12 months. There are a total of 11 such investors for the Hong Kong offer, which could raise as much as $13.1 billion. Standard Chartered is the third-largest investor, according to people familiar with the situation, following Qatar Investment Authority, which is subscribing to $2.8 billion of shares and Kuwait Investment Authority, which is opting for $800 million. AgBank has long been considered the weakest of China's four big banks due to a large legacy of bad loans. It, however, is still considered an attractive investment, since it is the last big one to list. Standard Chartered said the two banks plan leveraging off each others' strengths and have already agreed to explore opportunities for collaboration. These may include working across global financial markets, capital markets, international trade corridors, small and medium-sized enterprises and consumer finance sectors, while also looking to share economic research. AgBank, which is headquartered in Beijing, is China's third-largest lender by assets and has over 23,000 branches, servicing about 2.6 million corporate customers and 320 million retail customers. The transactions is subject to successful completion of AgBank's IPO and will be financed by Standard Chartered's internal cash resources. AgBank will give the final price for the IPO on July 7, and its stock will start trading in Shanghai on July 15 and in Hong Kong the following day. At 0748 GMT, Standard Chartered shares were up slightly in London at 1,662 pence, in line with the Stoxx Europe 600 banks index. -By Kaveri Niththyananthan and Patricia Kowsmann, Dow Jones Newswires; 4420 7842 9299; [email protected] (END) Dow Jones Newswires June 30, 2010 03:55 ET (07:55 GMT)