(Bloomberg, Sept 18, 2006) -- China's securities regulator has affirmed an option for companies to increase their stock offers if there is demand, helping Industrial & Commercial Bank of China complete the world's largest initial public offer this year.

The new rule, which takes effect from tomorrow, gives companies that are seeking to sell more than 400 million shares the so-called greenshoe option to sell additional stock if there is demand for it, the China Securities Regulatory Commission said in a statement published today in the China Securities Journal.

Industrial & Commercial Bank, China's largest lender, plans to raise as much as $14 billion selling shares in Hong Kong and $7 billion in Shanghai, according to people involved in the sale. The Beijing-based lender should have the option to expand its stock sale, the Chinese regulator Shang Fulin said on Sept. 15.

Greenshoe options also enable investment banks to help support share prices after a sale by controlling the amount of stock that is traded.

Bank of China increased its $9.7 billion Hong Kong IPO by $1.5 billion in June by issuing a greenshoe. Chinese companies raised $6.4 billion selling shares in over-allotment options since 2000, according to Bloomberg data as of Sept 13.

The rule for stock sales will help draw companies back to China by making simultaneous sales in Hong Kong and the mainland possible, the Chinese securities regulator said last week. PetroChina Co. and China Mobile Ltd. are among companies that raised $69.5 billion in Hong Kong IPOs over the past six years in part because the territory's rules meet global standards, boosting confidence in corporate governance.
Source:Bloomberg
tag:China economy