The bank aims to raise up to HK$31.56 billion.

Minsheng plans to offer 3.32 billion new H shares at an indicative price range of between HK$8.50 and HK$9.50 each, a term sheet said.

It has attracted US$340 million (HK$2.65 billion) from five cornerstone investors - Chinese Estates (0127); Glorious Sun Enterprises (0393) chairman Charles Yeung Chun-kam and his brother Yeung Chun-fan; China Overseas Finance Investment, a subsidiary of Ping An Insurance (2318); and Ever Eagle, owned by Yin Chung-yao.

ADVERTISEMENT

The price range represents a ratio of 1.67 to 1.8 times the estimated book value in 2010, sources said.

The bank's mainland-listed A shares traded at a ratio of 2.34 times and 2.05 times, based on estimated book value for 2009 and 2010.

Based on Friday's closing price of Minsheng's A shares at 8.13 yuan (HK$9.23) in Shanghai, the low end of the price range represents a 7.9 percent discount, against a 2.9 percent premium at the high end.

"The valuation of Minsheng was fairly priced, representing a discount on its listed peers, though it is not a particularly outstanding market player," said Ben Cheng Man-bun, an executive director at CASH Financial Services.

China CITIC Bank (0998), with a similar loan size as Minsheng's, was traded for 1.79 times next year's estimated book value, while China Merchant Bank (3968) and Bank of Communication (3328) traded at 3.07 times and 2.15 times.

"Investors who are not yet exposed to mainland banks may consider entering the market via Minsheng," said Cheng. "But most stockbuyers are waiting for the listing of Agricultural Bank of China."

Agricultural Bank is one of four state-owned lenders planning to list in Hong Kong next year.

"Subscription to Minsheng is expected to be strong, as the market is optimistic about the mainland banking sector and sentiment for new listings have recovered since strong debuts by IPOs last week," said Kenny Tang Sing-hing, Redford Securities research chief.