IPO market keeps shrinking

Hong Kong’s stock as a major capital market took another hit when China Everbright Bank Company put its IPO on hold.

The IPO could have raised some US$1.7 billion for Everbright Bank which delayed the offering because of continuous sluggish capital markets and relatively low valuations of banking shares. Everbright Bank will restart its IPO when there is a relatively good window, it said.

Everbright Bank had previously reduced the proposed size of the share sale from US$6 billion. It joins companies such as diamond retailer Graff Diamonds Corporation and Chinese machinery maker Sany Heavy Industry Company that together could have accounted for at least US$4.8 billion in offerings in Hong Kong this year.

Companies have raised just US$5.7 billion from IPOs in Hong Kong this year, down 64% from US$14.3 billion in the same period of 2011. Companies raised US$1.9 billion going public in Hong Kong in the first nine months of 2003, said Bloomberg.

Everbright Bank last week reported a 40% rise in first-half profit to US$2 billion. Its core capital adequacy ratio, a key measure of financial strength, rose to 8.05% as of June 30 from 7.89% in January. The ratio is still lower than the 8.5% minimum requirement imposed under new capital rules to be implemented at the start of 2013.