March 7, 2012 Source: Securities Times Reporter: Zhu Zhongwei
The plan of Industrial Bank (IB) for tailored additional shares has been determined, and four strategic investors were selected a few days ago. IB aims to raise funds not more than RMB 26.38 billion by issuing not more than 2.073 billion shares.
In this regard, Tang Bin, Director and Board Secretary of IB indicated in an interview by the reporter from Securities Times yesterday that, to look back at the development course of IB, all the leap-frog development made by IB had been accompanied by major changes in its shareholder structure. The targets of this tailored issuance are mainly large group companies that have powerful strength and strong industrial background, with both parties possessing much extension and cooperation space in terms of business channel s and customers.
When the reporter interviewed Tang Bin, he indicated that he had just received a call from a former foreign director just now, who had asked about the introduction of strategic investors by IB. After getting an affirmative answer, the foreign director was very excited and said, “congratulations to you”. Currently, the economic slump across the world makes the banking industry in every country face the pressure to supplement capital. It is of great significance for the development of a bank to find good strategic investors at this time.
It is reported that, at the very beginning of this financing plan, IB hoped to combine capital supplementation with business cooperation from investors in an all-round way. Therefore, when selecting investors, the bank not only attached importance to the financial strength, but more to the qualification of an investor. It laid store by whether an investor has a collaborative effect with IB, whether it recognizes the business culture and long-term investment value of IB, and whether it can help improve the shareholder structure and enhance the corporate governance of IB.
“Our work team contacted over 70 state-owned and private enterprises across China, and all of them are the country's most superior blue chip companies. Almost all potential investors with whom we held consultation recognize the investment value of IB, but only a limited number of investors intend to undertake an actual subscription because of tense liquidity in the real economy caused by the unstable macroeconomy in the last year,” Tang Bin said. Although some investors had a strong intention to subscri be and launched the decision-making process, they regretfully chose to give up in the end.
In addition, Tang Bin also said that this non-open issuance had also been restricted by the provision that tailored additional shares allow not more than 10 investors. He said: “As for the financing scale of RMB 25 billion, RMB 2.5 billion should be raised from each investor on average. Let alone Fujian, there are not many enterprises across China who can make such a big investment. Furthermore, these shares will be locked up for at least three years. Therefore, besides bringing a considerable amount of resources and deepening cooperation, these investors should also have a far-sighted strategic vision.”
IB finally decided to choose four investors including PICC, China National Tobacco, Beijing Infrastructure Investment, and Shanghai Eightrent ZhengYang Rental Co., Ltd. based on contacts and discussions lasting months.
Tang Bin expressed, “These investors all have the following characteristics: powerful overall strength, rich cooperation resources, and high recognition of the long-term investment value of IB”. For instance, the parent company of PICC Asset Management, PICC, has businesses covering a number of fields such as insurance, trusts, funds, and asset management, which are mutually complementary to the banking businesses. And, Beijing Infrastructure Investment Co., Ltd. plays an important role in the construction and administration of urban transport across Beijing, it also thinks highly of the business experiences of IB in relevant fields and anticipates more cooperation.
IB's growth to the current scale, mainly benefited from all previous introduction of strategic investors, expressed Tang Bin.
In 2000, IB introduced eight famous enterprises both from home and abroad including Shenhua Guohua Energy Investment Co., Ltd. and China Electronics Corporation. With the funds of RMB 2 billion brought by theses investors, IB accelerated the process of establishing branches across China. Three years later, IB accomplished its nationwide distribution, and changed its name from “Fujian Industrial Bank” into “Industrial Bank” with the approval of the central bank of China, thus growing into a national bank from a regional one, a big leap for the bank.
In 2003, by introducing Hang Seng Bank, Government of Singapore Investment Corporation, International Finance Corporation (IFC), IB obtained seemingly the most preciouse RMB 2.8 billion of capital.
Up to now, with these two rounds of financing, IB has not only accomplished its nationwide distribution, and its concept of corporate governance has also been transformed from “shareholders' interests foremost” to “giving consideration to the interests of stakeholders” and finally to “giving full consideration to the harmonious and sustainable development of the environment, society, enterprises and banks.
Following this, IB started its attempt in energy conservation and emission reduction. “Up to now, the scale of such financing programs has reached about RMB 70 billion, covering thousands of projects, and reducing 6400 tons of carbon emissions, which is equivalent to shutting down 146 thermal power plants (100MW), or stopping 70,000 taxis running for 44 years in Beijing,” indicated Tang Bin.
Tang Bin also believed that, similar to the introduction of strategic investors both from home and abroad to establish a capital bridge years ago, these new strategic investors introduced this time round would not only bring capital, but more importantly the overall elevation of both hard and soft strength.
“In order to manifest the principle of fairness, in the investment attraction at this time, IB combines the capital supplementation and improvement of shareholder structure together and intends to make those shareholders with capability and strength shoulder more responsibilities. All our original shareholders do not participate in this subscription,” Tang Bin told the reporter.