Bank of China (BOC), the country's second-largest lender, launches its online subscription today after it set a price of 3.08 yuan (38.5 US cents) per share in its domestic initial public offering (IPO).

The bank planned to issue 6.493 billion A shares to raise 20 billion yuan (US$2.5 billion), BOC said in a statement published in the Shanghai Securities News yesterday.

Individuals have been able to place orders online since June 23 for BOC shares, which will trade on the Shanghai Stock Exchange, the bank said.

With more than 120 billion yuan (US$15 billion) bid for offline subscriptions, it is predicted that the bank will receive around 800 billion yuan (US$100 billion) in online subscriptions for BOC shares.

The price is in the middle of the 3.05 yuan (38 US cents) to 3.15 yuan (39 US cents) range set on June 19, and compares with the HK$2.95 (38 US cents) at which BOC sold shares to investors in a Hong Kong IPO last month.

"The price is lower than many analysts have predicted, leaving a wider space for the share price to grow later on," Cheng Weiqing, an analyst with CITIC Securities, said.
"Institutional investors are rearranging their investment portfolio to prepare themselves for the subscription of BOC shares," he added.

Domestic investors have demonstrated a high passion for the country's largest IPOs so far after the bank said earlier that it planned to list its 20 billion yuan (US$2.5 billion) worth of A shares on the Shanghai bourse by July 5.

Insurance companies, financial companies and fund management companies are among the top three investors in BOC's offline subscription. Eight insurance companies subscribed offline to 624 million shares at a cost of 2 billion yuan (US$250 million).

Financial companies and fund management companies respectively acquired 608 million shares and 603 million shares.

The shares purchased by the three types of institutions accounted for 28.3 per cent of BOC's public offering.

Earlier in the month, 20 per cent or some 3.96 billion yuan (US$495 million) of BOC shares were placed with 14 domestic strategic investors, of which five are also insurance companies.

However, analysts doubted that BOC shares would jump as high as China CAMC Engineering Co Ltd on its first day of trading on July 5.

China CAMC Engineering, the first company to go public after the year-long ban was lifted last month, drew 213 billion yuan (US$26.6 billion) in bids, raising 444 million yuan (US$55.5 million) to build irrigation works and fishing ports. Its shares jumped more than fourfold on their first day of trading on June 19.

Editor: Donald