1. 1 IPO Of ICBC – The Role Of China International Capital Corporation Limited Group 3 Wong Kai Yuen043076 Kong Ka Man043089 Lui Ching Kwan043061 Lai Pui Ha043074 Lee Tsui Woon043077 Na Ka Ki043082

2. 2 Introduction General investment bank function General investment bank function Distinguishing feature of CICC Distinguishing feature of CICC IPO of ICBC IPO of ICBC

3. 3 The investment bank Roles and Functions in IPO Expertise Expertise –Market information Timing Timing Pricing Pricing –Listing service Underwriting Underwriting Private placement Private placement

4. 4 Roles and functions in IPO Legal requirement Legal requirement –A new applicant must appoint a sponsor to assist it with it listing application (Main board rule 3A.02) –A Main Board sponsor must be a corporation or an authorized financial institution (Main Board Rule 1.01)

5. 5 –A Main Board sponsor must be licensed or registered under applicable laws to advise on corporate finance matters (Main Board Rule 1.01)

6. 6 Underwriting Underwriting Syndicate Underwriting Syndicate –Lead or managing underwriter –Underwriting dealer purchase the shares and redistribute the shares to the investors purchase the shares and redistribute the shares to the investors –Selling group only earns commission only earns commission

7. 7 Documentation Preparing the new applicant for listing, lodging the formal application for listing and all supporting documentation (Main board rule 3A.11) Preparing the new applicant for listing, lodging the formal application for listing and all supporting documentation (Main board rule 3A.11)

8. 8 Contents of listing documents Statement of active business pursuits The new applicant must state its business activities and financial information (Appendix 1A to the Main Board Rules – Paragraphs 28 to 40) Statement of business objectives The new applicant must provide information on its general business trend, financial and trading prospects (Appendix 1A to the Main Board Rules – Paragraphs 32 to 34(1)) Use of proceeds The new applicant must disclose details of its intended use of proceeds (Appendix 1A to the Main Board Rules – Paragraphs 48 to 50) Profit forecast Profit forecast is not compulsory (Main Board Rules 11.16 to 11.19) Accountants ’ report To cover 3 financial years except for exempted To cover 3 financial years except for exempted companies (Main Board Rule 4.04) Can be prepared in accordance with either Hong Kong Financial Reporting Standards or International Can be prepared in accordance with either Hong Kong Financial Reporting Standards or International Financial Reporting Standards for primary listings on the Exchange (Main Board Rules 4.11 to 4.13) May be prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) or other acceptable accounting standards acceptable to the Exchange under certain circumstances (Main Board Rules 19.14 and 19.39) May be prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) or other acceptable accounting standards acceptable to the Exchange under certain circumstances (Main Board Rules 19.14 and 19.39) Source: Hong Kong Shock Exchange and Clearing Ltd.

9. 9 The prospectus The prospectus –company's business, financial statements, biographies of officers and directors, detailed information about their compensation, etc. Road show Road show –promote the company prospect and the quality of management team –Collect market information Private placement Private placement –Usually before IPO –Numbers of individual and financial institutions

10. 10 Greenshoe (over-allotment option) Greenshoe (over-allotment option) –right to sell additional shares –up to 15% of the original number of shares offered

11. 11 CICC Profile Establish on 1995 Establish on 1995 Strategic partnership among prestigious Chinese and international financial institutions and corporations Strategic partnership among prestigious Chinese and international financial institutions and corporations First joint venture investment bank in China First joint venture investment bank in China

12. 12 CICC Profile Registered capital of US$125 million Registered capital of US$125 million Headquartered in Beijing Headquartered in Beijing With offices in HK, Shanghai & ShenZhen With offices in HK, Shanghai & ShenZhen

13. 13 6 Core business

14. 14 Shareholders

15. 15 Business activities Examples, corporate restructuring corporate restructuring Inter-bank lending and borrowing Inter-bank lending and borrowing purchasing and selling foreign currencies purchasing and selling foreign currencies mergers and acquisitions mergers and acquisitions

16. 16 CICC Culture CICC culture mainly concern on: CICC culture mainly concern on: –Integrity –Professionalism –Creativity –Competitiveness –Teamwork

17. 17 Business

18. 18 CICC Business

19. 19 Investment Banking Department IBD services include : IBD services include : 1.Equity financing 2.Debt financing 3.Corporate restructuring 4.Mergers and acquisitions in both domestic, international capital market 5.Asset securitization

20. 20 Equity Financing Equity Financing service includes : Equity Financing service includes : –IPO –follow-on offerings –private placements Industrial and Commercial Bank of China Year 2006 The largest H shares IPO so far, raising about US$14 billion (pre-Greenshoe).

21. 21 Debt financing Debt financing service includes : Debt financing service includes : –institutional bonds –convertible bonds –short-term financing bonds –financial bonds

22. 22 Strengths

23. 23 Lead underwriter Leading Chinese enterprises to access overseas Leading Chinese enterprises to access overseas –CICC has led four of the top five A-share IPOs in domestic equity market. –CICC has led all top five debt (including convertible debt) offerings in domestic debt market.

24. 24 Bookrunner Ranking for Overseas Equity Issuing of Chinese Enterprises Since 1997 Note ： The ranking was made by allotting the issuing size averagely between bookrunners. Information Source ： Equityware, up to December 31, 2005

25. 25 Bookrunner Ranking for Overseas IPO Issuing of Chinese Enterprises Since 1997 Note ： The ranking was made by allotting the issuing size averagely between bookrunners. Information Source ： Equityware, up to December 31, 2005

26. 26 Top Overseas IPO of Chinese Enterprises Since 1997

27. 27 Professional investment team Senior Management with Global Experience Senior Management with Global Experience –even served as Managing Director in a leading U.S. investment company –can contribute more knowledge –help the CICC has a good operation management

28. 28 Extensive Experience in Domestic Market Extensive Experience in Domestic Market –with outstanding performance records and industry reputation Management Group with Excellent Professional Attributes Management Group with Excellent Professional Attributes –have good reputations in financial field –without any misdemeanor records.

29. 29 Case study: IPO of ICBC How does CICC Help ICBC to issue IPO?

30. 30 Source : HKEx

31. 31 Planning and Preparation Selecting the sponsor, advisers and underwriters IPO of ICBC is the world ’ s Biggest one IPO of ICBC is the world ’ s Biggest one near $300 million banking fees near $300 million banking fees → Competition → Competition CICC Success as Chief investment bank CICC Success as Chief investment bank

32. 32 Role of CICC Joint global coordinator Joint global coordinator Joint bookrunner Joint bookrunner Joint sponsor for both H and A share Joint sponsor for both H and A share Source : HKEx

33. 33 Preparing the timetable Specific timetable of the issue of IPO was prepared on May Specific timetable of the issue of IPO was prepared on May Timetable of the Initial Public Offering Year 2006 January establish non-exclusive strategic cooperations March Select the Joint Lead Managers 25-Mar Listing application have been accepted 22-Jun The advance booking form had submitted 18-Jul The Formal application for listing was passed The Formal application for listing was passed August The underwriting syndicate prepare for the Road Show 21-Sep ICBC was under the hearing by Listing Committee 9-Sep Road Show was started 16-Oct Write application and eIPO was started 19-Oct Write application and eIPO was ended 20-Sep Stock Price determined 27-Oct Both H share and A share listed

34. 34 Structuring Capital Share : Before Global Offering Before Global Offering Source : HKEx

35. 35 Structuring Upon Completion of Global Offering and A Share Offering Upon Completion of Global Offering and A Share Offering Source : HKEx

36. 36 The Listing Application On 22 nd June : Submit the advance booking form (Form A1 in Appendix 5 to the Main Board Rules) with a timetable to HKEx Submit the advance booking form (Form A1 in Appendix 5 to the Main Board Rules) with a timetable to HKEx On 18 th July : Submit the Formal application for listing Submit the Formal application for listing

37. 37 The Listing Application On 21 st September : Hearing by Listing Committee Hearing by Listing Committee Obtaining approval from the Listing Committee of the Exchange Obtaining approval from the Listing Committee of the Exchange

38. 38 Targeting and Contacting Investors Road show Over the world like Singapore and some European countries Over the world like Singapore and some European countries Road Show in Hong Kong Clearing up nonperforming loans of the bank Clearing up nonperforming loans of the bank

39. 39 Private Placement Investors in Hong Kong HK$27.2 billion worth of shares HK$27.2 billion worth of shares 27 percent of H shares. 27 percent of H shares. Li Ka-shing - HK$1.6 billion Li Ka-shing - HK$1.6 billion Lee Shau kee - HK$1.6 billion Lee Shau kee - HK$1.6 billion Overseas investors GIC Direct Investments - HK$2.8 billion GIC Direct Investments - HK$2.8 billion

40. 40 The offering prospectus 16/10/2006 – 19/10/2006 White Application Form + Prospectus 16/10/2006 – 19/10/2006 White Application Form + Prospectus 27/10/2006 Listed Date 27/10/2006 Listed Date Prospectus distribution 1. HSBC 2. ICBC 3. Hang Seng Bank 4. Bank of China Limited 5. Standard Chartered Bank Limited

41. 41 e-IPO www.eipo.com.hk www.eipo.com.hk The first H share allowing Write Application though eIPO The first H share allowing Write Application though eIPO Main difference : - check account are not necessary Main difference : - check account are not necessary

42. 42 Price Determination Set between 1.95 and 2.23 times 2006 price-to-book value Set between 1.95 and 2.23 times 2006 price-to-book value Deutsche Bank : pricing will be up to 2.9 times price-to-book value Deutsche Bank : pricing will be up to 2.9 times price-to-book value CICC : the fair value should be about 2.31 times 2006 price-to-book value CICC : the fair value should be about 2.31 times 2006 price-to-book value

43. 43 Stabilization Strategic investors agreed not to sell / dispose / transfer any shares for certain period of time Strategic investors agreed not to sell / dispose / transfer any shares for certain period of time Lock-up period Lock-up period Private Placement - 12 months Private Placement - 12 months –Agree to inform before dispose Strategic investors - 3 years Strategic investors - 3 years –Only up to 50% of the share were permitted to sell / dispose / transfer

44. 44 Conclusion

45. 45 Main Function Giving Advice Giving Advice –When to issue –How many –What price Filing Documents Filing Documents –Prospectus Underwriting Underwriting –Road Show

46. 46 IPO issue process March Select Investment bank May Detail planning on the IPO schedule July 18 th Apply for issuing stock in HKEx Aug Formal Issuing Road show Sep 21 st Listening by HKEx Oct 16 th IPO Open 19 th IPO Close 20 th Expected price determination date 26 th Results announcement date 27 th Cheques refunded 27 th Listing of Shares

47. 47 Issue Particulars Industry sector Banking Listing category Mainboard Major Shareholders MOF 43% Total shares outstanding (mn) 327,822 H share issue price (HK$) 2.56 – 3.07 H share total offer for size (HK$mn) 90,601 – 108,650 H shares offered for placement (mn) 33,621.45 H shares offered for IPO (mn) 1769.55 Market cap. of shares (HK$mn) 839,000 – 1,006,400