China’s CITIC Bank, the country’s seventh-largest bank, has raised $5.4 billion (£2.7 billion) in the world’s biggest initial public offering (IPO) so far this year.

Shares in the Beijing-based bank were priced at the top end of their range before the start of dealings in Shanghai and Hong Kong next week. The fundraising, which values the state-owned bank at $28.9 billion, is only the second simultaneous listing in Shanghai and Hong Kong since last October’s landmark $21. 9 billion debut of Industrial and Commercial Bank of China (ICBC), the country’s biggest lender.

CITIC Bank raised $3.7 billion by selling 4.9 billion H shares in Hong Kong at HK$5.86 apiece, and $1.7 billion from selling 2.3 billion yuan-denominated A shares in Shanghai.

The overseas institutional tranche of the offering was covered 80 times, while the Hong Kong retail component was oversubscribed 230 times. That level of demand saw the retail tranche of the offering rise from 5 per cent to 20 per cent of the total.

The success of the fundraising underlines investor appetite to gain exposure to China’s phenomenal double-digit economic growth. This week, China said that its economy grew 11.1 per cent in the first quarter of 2007, with inflation reaching a six-year high of 3.2 per cent last month, stoking expectations that Beijing will seek to cool growth by raising interest rates.

CITIC reported a 25 per cent rise in profits last year as China’s economy grew at the fastest pace for 11 years. This month, the bank said it expected profits this year to rise 53 per cent to 5.7 billion yuan. Analysts forecast annual loan growth this year and next of about 20 per cent.

CITIC, which has 446 branches, was founded in 1987 as CITIC Industrial Bank, the largest subsidiary of CITIC Group, whose stake falls from 80 per cent to 64 per cent following the sale.

Spain’s BBVA and Hong Kong’s CITIC International Financial Holding between them bought about $1 billion of shares in the IPO in order to maintain their respective stakes of 4.8 per cent and 16.4 per cent. Last year, BBVA became the first Spanish bank to secure a foothold in China’s retail banking sector with a €989 million (£670 million) investment in CITIC.

Japan’s Mizuho, China’s National Council for Social Security Fund, PICC Property and Casualty, and China Life Insurance also backed the fundraising. CITIC was advised by China International Capital, CITIC Securities, Citigroup, HSBC and Lehman Brothers.

China’s Ping An Insurance raised $5 billion from a secondary share sale in February.

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