ABC's IPO: A Brilliant Cut or Crude Offering?

On the eve of June 24 in the brightly illuminated 11th floor of the ABC headquarters in Beijing, underwriters had been cramming through price inquiry reports since the early afternoon. An underwriter at scene said investment banks were still whittling down price ranges from price inquiries to gear up for the roadshow kickoff the next day.

The next morning in Hong Kong, subscription had reached US$ 6 billion, mostly at a price-to-book ratio of 1.6 times. These figures were the lowest offering price acceptable to ABC's management. Days before, the price range of ABC's H-share offering had been finalized at HK$ 2.88-3.48 per share, representing a price-to-2010 book ratio of 1.55 to 1.79 times.