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Welcome to Profit Confidential • Monday, May 21, 2012

Canada Getting a Piece of Some Serious IPO Action

Thursday, November 2nd, 2006
By Inya Ivkovic, MA for Profit Confidential

This week we found out that Canadian financial institutions are going to participate in the largest IPO in the history of financial markets–the $21-billion initial public offering of the Industrial and Commercial Bank of China. Royal Bank of Canada was named a co-lead manager, while Bank of Montreal also confirmed participation, but declined to offer more details.

Aside from earning huge fees, participation of Canadian banks in this deal has other favorable consequences. For starters, it will put us at the front of the line when it comes to capitalizing on the currently strongest economy in the world. Among other things, China is very likely to open its financial industry to Canada and even increase the upper limits on foreign business ownership. In more ways than one, the ICBC IPO is more than likely going to serve as a launch pad for more lucrative deals in China.

Just consider this. In terms of assets under management, ICBC is China’s biggest commercial bank. It caters to more than 2.5 million corporate clients and more than 150 million individuals. To have a client base such as this is unthinkable in the western world. We just cannot match China in size, and in the financial industry, size does matter.

To put things into perspective for Royal Bank, currently, the bank has only 20 employees in China. If and when this deal pans out, this number is certain to skyrocket. This is not news only from the perspective of global prestige and more quality jobs for Canadians. In this day and age, if a bank wants to grow globally, it cannot do so without developing a presence in China. And Royal Bank, and Canada by extension, has just jumped over the first major hurdle.

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