The sky over Beijing has been crowded with senior investment bankers over the past few days.
The latest decision by Industrial and Commercial Bank of China (ICBC), the country's largest lender, to invite financial firms to pitch for advisory roles on its US$10bn-plus overseas listing, unleashed a wave of aerial activity.
Private jets and commercial airliners containing the cream of the global investment banking community have been landing in Beijing in preparation for the long-awaited "beauty parade" by the state lender.
Their banks would not confirm rumours that chief executives such as Goldman Sachs' Hank Paulson, Merrill Lynch's Stanley O'Neal, Deutsche Bank's Josef Ackermann and Credit Suisse's Oswald Grubel would be heading for ICBC's headquarters.
But even if Wall Street bosses -- once known as the "Masters of the Universe" -- are not physically in the universe's most sought after and fiercely-contested investment banking market, the race for ICBC, with 20,000 branches and control of a fifth of China's banking sector, will be tough and dirty.
"This is the big one," says a senior executive at one of the firms involved. "No stone will be left unturned to win ICBC."
At stake are not only an estimated US$300m in fees to be shared by at least two and up to four international banks -- but also the prized bragging rights associated with arranging the world's biggest initial public offering since 1999. Yet, the responsibilities attached to underwriting China's largest-ever IPO -- expected for the end of 2006 at the earliest -- are similarly large.
Beijing will remind banks that ICBC's failure to list, or a lukewarm reception from investors, would destroy its attempts to show that China's much-derided banking system has fixed the antiquated systems and widespread corruption of the past.
The banks chosen for the parade -- Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan and Merrill Lynch -- will enter ICBC's gleaming building in western Beijing armed with both facts and words. The facts, contained in fat "pitchbooks" to be presented to ICBC's selection committee, will tend to confirm the stereotype that most investment banks look the same.
Colourful charts extolling the successes of recent IPOs will be accompanied by league tables doctored in such a way as to show the presenting investment firm in the best possible light.
Words, though, could make more of a difference.
"This is where the global big guns come in," says a veteran Asia-based banker. "ICBC will look in the white of their eyes and ask whether they will be there if things go wrong".
Goldman Sachs will have an easier job than others as it recently led a group of investors to a US$3.8bn purchase of a stake in ICBC.
And while its rivals cannot accuse it of not putting its money where its pitch book is, Goldman Sachs' status as the front-runner for an IPO role -- a turnround from initial perceptions that the investment would prevent it from advising on the IPO -- has prompted a barrage of attacks.
A common allegation is that the US firm has a conflict of interest or at least a staffing problem as it is also arranging the Hong Kong IPO of Bank of China, another "Big Four" state lender that is set to list only months before ICBC.
Goldman Sachs rejects these criticisms. Competitors also recall that the US firm once employed a relative of ICBC chairman Jiang Jianqing as a summer intern. However, that was part of Goldman Sachs' "friends and family" policy, which is specifically designed to accommodate clients' requests without compromising the firm's integrity.
Credit Suisse, which has a long-standing relationship and an asset management joint venture with ICBC, and Deutsche Bank, which last year sealed an investment banking partnership signed by Mr Ackermann himself, also find themselves in a good position.
In China, though, political connections count at least as much as financial prowess. The Byzantine decision-making system appears to have already claimed one victim: Morgan Stanley.
The firm was excluded from the ICBC running despite arranging the successful US$9.2bn IPO of China Construction Bank (CCB) -- the only Chinese lender to have listed abroad so far. Conspiracy theories on the surprising decision abound, but most industry watchers agree that Morgan Stanley will be lobbying furiously for the opportunity to present its credentials to ICBC.
With competition already at fever-pitch, rival banks will be watching nervously to see whether Morgan Stanley's chief executive John Mack steps out of its private jet at Beijing airport in the coming days.
FT Syndication Service