Handling China mega-IPO brings prestige, pain
Thursday, 24 June 2010
BEIJING/HONG KONG, June 23 (Reuters): Four years ago, Pan Gongsheng was board secretary at Industrial and Commercial Bank of China and steered what is now the world's most valuable bank through its $21.9 billion initial public offering (IPO), the largest ever.
His style then was to subject the army of bankers piecing the deal together to a strict regimen of daily report cards, grading everything from attendance to typing errors in the offer prospectus - all of which were reported back to government officials in Beijing.
Now, Pan is back.
As vice president of Agricultural Bank of China, he is the driving force behind an IPO that could raise more than $23 billion. And his tactics haven't changed.
Unlike a company, whose founder has the final say, a state-run institution like AgBank is subject to many layers of bureaucracy. The man in charge is a government official, not an entrepreneur.
At AgBank's headquarters near Beijing's Wangfujing business area, there is a classroom in which all the investment banks involved in the IPO have five seats each.
The bank, founded by Mao Zedong in the 1950s as the central bank's rural arm, holds a daily roll call to see how many people each bank sends -- as a test of their commitment to the deal, according to sources directly involved in the process.
Bankers expecting to handle such a large and prestigious deal in oak-paneled rooms and with Aeron office chairs - beware.
When underwriters need more information on the bank, they are directed to the data room -- a musty, gloomy, underground area, according to the sources, who work for the underwriters but are not authorised to speak publicly about the offering.
Banks are also frequently reminded that, as is the Chinese way, title counts.
One underwriter earned the ire of AgBank executives by sending two interns to an important discussion. A rival underwriter sent two managing directors to the same meeting, winning praise from management for their commitment, the sources said.
His style then was to subject the army of bankers piecing the deal together to a strict regimen of daily report cards, grading everything from attendance to typing errors in the offer prospectus - all of which were reported back to government officials in Beijing.
Now, Pan is back.
As vice president of Agricultural Bank of China, he is the driving force behind an IPO that could raise more than $23 billion. And his tactics haven't changed.
Unlike a company, whose founder has the final say, a state-run institution like AgBank is subject to many layers of bureaucracy. The man in charge is a government official, not an entrepreneur.
At AgBank's headquarters near Beijing's Wangfujing business area, there is a classroom in which all the investment banks involved in the IPO have five seats each.
The bank, founded by Mao Zedong in the 1950s as the central bank's rural arm, holds a daily roll call to see how many people each bank sends -- as a test of their commitment to the deal, according to sources directly involved in the process.
Bankers expecting to handle such a large and prestigious deal in oak-paneled rooms and with Aeron office chairs - beware.
When underwriters need more information on the bank, they are directed to the data room -- a musty, gloomy, underground area, according to the sources, who work for the underwriters but are not authorised to speak publicly about the offering.
Banks are also frequently reminded that, as is the Chinese way, title counts.
One underwriter earned the ire of AgBank executives by sending two interns to an important discussion. A rival underwriter sent two managing directors to the same meeting, winning praise from management for their commitment, the sources said.