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Investment Banking Merrill Lynch ICBC in IPO Financial Institution in HK ECON 310 s4g4.
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Transcript of Investment Banking Merrill Lynch ICBC in IPO Financial Institution in HK ECON 310 s4g4.
Introduction to investment Bank
Best known in the world
Help companies to raise money in primary market
Intermediaries
Differ from commercial bank & brokerages Commerical Bank: Take deposits and make commercial and
retail loans
Brokerages:Assist in the purchase and sale of stocks, bonds, and mutual funds
Background of Merrill Lynch
Established in 1914
Owner: Charles E. Merrill & Edmund C. Lynch
Place: Wall street in New York City
In 1959 become 1st member firms of the New York Stock Exchange
Go public in 1971
CEO President & Chairman of
the Board
Industry: Finance & Insurance
Main Products Financial Services Investment Banking Investment Management
Background of Merrill Lynch (con’t)
Stan O’ Neal
I’m Stan O’ NealI’m Stan O’ Neal
Responsibilities of Merrill Lynch
Underwriting
Researching & provide advice
Pricing
Year Events
1980 Started the underwriting business
2001 E. Stanley O’ Neal became president and COOMerrill Lynch, Citigroup and Goldman Sachs
advised AT&T on its IPO
2002 E. Stanley O’ Neal became CEO
2003 7.1% market shares of the dealsE. Stanley O’ Neal became the first African-
America chairman of Merrill
2004 Won the advisory on the sale of AT&T Wireless Group
2006 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, a 2006 Supreme Court case involving security fraud claims
Multicultural Marketing of Merrill Lynch
African American Marketing Hispanic American Marketing LGBT (Lesbian, Gay, Bisexual and Transgender)
Marketing Native American Marketing South Asian Marketing Special Needs Marketing Women’s Marketing
Major Locations of Merrill Lynch
New York City, New York, U.S., global headquarters
Jacksonville, Florida, U.S., corporate center, supporting North America operations
Hopewell, New Jersey U.S., corporate center, supporting North America operations
Jersey City, New Jersey U.S., corporate center, supporting North America operations
Major Locations of Merrill Lynch (Con’t)
Princeton, New Jersey, U.S., corporate center, GPC Home Office
Singapore, corporate center, supporting Asian Pacific Rim (APR) operations, namely Hong Kong & Tokyo
London, UK, European headquarters
Hong Kong, PRC Tokyo, Japan
Ranking of Merrill Lynch
Best at Proving IPOs and services
0
10
20
30
40
50
60
70
80
Merrill Lynch Goldman,
Sachs
Alex. Brown
& Sons
CS First
Boston
Morgan
Stanley
Investment bank
Points
Best Service in EquityUnderwriting
0
20
40
60
80
100
120
140
160
Goldman,Sachs
MerrillLynch
CS FirstBoston
SalomonBrothers
MorganStanley
Inves tment Bank
P oints
Business Groups of Merrill Lynch
Big 3 Groups: GMI: Global Markets &
Investment Banking Group
GPC:
Global Private Client
MLIM:
Merrill Lynch Investment Managers/ BlackRock, Inc.
Highlights achieved in the markets
No. 1 trader of U.S. Stocks (NYSE) since 1989 2005
No. 1 Private Banking Assets, fifth consecutive year, Leading Player Best Investment Bank of the Year by The Banker. Top European Equity House by International Financing Revie
w Top China Equity House by International Financing Review As
ia.
2006 Best Investment Bank by Euromoney Barron's Best 100 Brokers Top Full-Service Brokerage House
Background of ICBC
Established in 1 Jan 1984
One of the big four commercial bank
Decided to restructure
IPO Procedure
2005
Financial restructure
2006
9 Mar Investment banks were chosen
12 Jul ICBC decided Issue A and H-share simultaneously
20 Jul Formal application
9 Oct International Road Show
16 – 19 Oct Subscription for the Public
20 Oct prices $3.07 (upper limit) 23 Oct Oversubscribed 76 times
977,000 people involved
US$543 billions was frozen
27 Oct made public, price @ $3. 60 ( 17%)
Specialty of ICBC IPO
Raise US$21.9 billion
Break the record made by NTT DoCoMo Inc (J
apanese mobile phone company)
Which raise $18.4 billion in 1998
The biggest IPO in the world
Source:The Wall Street Journal Briefing (http://www.tdctrade.com/econforum/dj/wsj061001.htm)
First time issue A and H-shares simultaneously
Landmark of the stock history
the Chief Executive
Mayor of Shanghai
Good example for other enterprises
Specialty of ICBC IPO(con’t)
attended the ICBC’s IPO ceremony in Hong Kong and Shanghai respectively
Biggest white form eIPO application
~10% investors using eIPO (~ 83,000 people)
Protect the environment
Convenient to investors
Saving the transaction fee to investors
Receive allotment result by email
Specialty of ICBC IPO(con’t)
The highest capital was frozen in A share
$800 billion was frozen
break the record of the Bank of China.
Specialty of ICBC IPO(con’t)
Other new records
Most retailer investors apply ( 997,000 people)
First day HK$37.4 billion
No. of bank collect form 7 Banks, 88 branches
Issue Warrant and Share simultaneously
Specialty of ICBC IPO(con’t)
Influence in HK
Ensure the international financial position in HK
2004 world 3rd largest fund raised market After New York and Madrid
2006 HK has good banking system & listing requirement ICBC & BoC IPO → the largest fund raised market
Influence in HK (con’t)
Issue H-share → improve corporate governance → internationalization
Going public in HK → Trend in the foreseeable future
Comment
Playing an important role on adjusting the initial price of stock
advice: not to issue so many warrants
to stabilize the initial price
Setting of initial price
a gain for all the subscribers in the market
underwriting fee: 2.5% per book runner
Merrill Lynch itself earned $50M
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Comment (Con’t)
Position has been raised
Exposure of a variety of risks
e.g. market risk, Liquidity Risk, Competitive Environment
caused by the unpredictable factors
Suggestion: paying more attention + identifying the risks + solutions
043083 SIU KAM HA JOYCE
Conclusion
Merrill Lynch had played an important role on the success of ICBC stock issuing
giving contributable advice
gaining satisfactory earnings + growth
being one of the most famous investment banks in the world
affecting other companies’ ranking
somehow a promotion of a stock with the invitation of large book runner
043083 SIU KAM HA JOYCE