UPDATE:Prudential, UOB Among 12 Cornerstone Investors For China Everbright IPO - Source

Shanghai-listed lender China Everbright Bank Co. (601818.SH) has locked in 12 cornerstone investors including Prudential PLC (PRU.LN) and United Overseas Bank Ltd. (U11.SG) to buy one-third of shares on offer ahead of its Hong Kong listing, a person familiar with the situation said Friday.

Cornerstone investors, who are guaranteed large allotments in an initial public offering in exchange for agreeing to hold the shares for a certain length of time, give other investors confidence in a deal at a time of volatile markets.

The cornerstone investments come as the Chinese bank, which postponed the launch of order-taking from investors for its IPO due June 27, has yet to disclose a date for kicking off the deal. The Shanghai-listed bank has been gauging investor interest for its Hong Kong IPO from mid-June and had been expected to list mid-July.

The lender said in February it would sell up to 10.5 billion shares in the Hong Kong deal, with an overallotment option of an additional 1.5 billion shares. It is the latest mid-sized Chinese lender to tap capital markets to boost its capital as Beijing tightens monetary policy to cool the economy.

The lender's Shanghai-listed shares ended at CNY3.28 Friday. If it prices its Hong Kong shares at that level, it would raise up to US$6 billion from the offering, based on a Dow Jones Newswires calculation.

China Everbright couldn't immediately be reached for comment. Prudential declined to comment. A representative contacted at UOB didn't immediately have comment.

China Everbright's net profit rose 34.6% to CNY9.2 billion from CNY6.8 billion a year earlier in the first half of this year. Around CNY94.9 billion, or 11.5% of China Everbright's total loans was to local government financing vehicles as of the end of March, down from 15% at the end of December.

China International Capital Corp., Morgan Stanley, UBS AG, J.P. Morgan Chase & Co., BNP Paribas SA, China Everbright Securities (HK) Ltd., HSBC Holdings PLC, BOC International Holdings Ltd., Daiwa Securities Capital Markets Co., and Shenyin Wanguo (HK) Ltd. are handling Everbright Bank's IPO, based on a term sheet seen by Dow Jones Newswires earlier.

-By Prudence Ho, Dow Jones Newswires; 852-2802-7002; [e-mail]