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June 25, 2017

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Fubon to buy IPO of Chinese Harbin Bank

TAIPEI, Taiwan -- Fubon Life Insurance Co. (富邦人壽), one of Taiwan's largest insurers, has pledged to buy a sizable portion of Harbin Bank's (哈爾濱銀行) initial public offering today.

The bank plans to sell 3.02 billion shares in total, but the price range remains unclear. Fubon and Citic Capital are listed among seven cornerstone investors, according to a report recently published by the Wall Street Journal.

Fubon will partner with Chinese private-equity firm Citic Capital Holdings to buy 43 percent of Harbin Bank's IPO, which is expected to raise around US$1 billion.

Fubon will purchase US$290 million worth of shares, while Citic will invest US$150 million. People familiar with the deal said that the seven investors will take up more than half of the IPO offering, or US$510 billion.

The bank intends to sell 90 percent of the IPO to institutional investors. It is the fourth Chinese bank to be listed in Hong Kong since November 2013.

Analysts forecast that Harbin Bank will earn a record profit of US$691 million in 2014, up 24 percent from 2013, according to a report released by DBS Vickers, one of the underwriters of the IPO.

According to DBS, the bank loans money to small businesses in the northeastern province of Helongjiang. Only 52 of the bank's 301 branches are located outside the province.

Investors have expressed concerns over China's pervasive shadow banking problem, as well as the quality of the country's banking assets and enterprise debts.

According to China's National Audit Office, the debt and guarantees issued by local governments surged to 17.9 trillion yuan in June 2013, compared with 10.7 trillion yuan at the end of 2010. This has raised concerns over repayment and potential defaults.

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