Agricultural Bank of China has set a floor price for the Hong Kong portion of its $23 billion stock market listing, according to a report, while sources said key investors have agreed to buy $5.45 billion of the shares.

AgBank Vice-President Pan Gongsheng was quoted by the 21st Century Business Herald as saying the Hong Kong offer will not be lower than HK$2.80 a share.

That would represent a price-to-book multiple of 1.7 times, the report said. A valuation at that level would be slightly higher than the 1.5-1.6 times book the market was expecting.

Pan's comments come as the bank and its underwriters are finalizing the price range for its Hong Kong and Shanghai offering. Like any IPO entrenched in an investor roadshow, the top executives push for a high valuation, while investors decided at what level they are comfortable investing.

People expected pricing to be somewhere around this level, because it could not be priced too low and also because market sentiment has improved quite a lot, said Alex Wong, a director at Ample Finance.

AgBank originally hoped to raise up to $30 billion but scaled back expectations amid a 20 percent drop in China's stock market in the past few months. The news on China's yuan policy has given a boost to China's stock market, helping sentiment around AgBank.

AgBank, the last of China's four big state banks to go public, is selling a 15 percent stake in a dual listing in Hong Kong and Shanghai, excluding a greenshoe option, as it looks to replenish its capital and drive growth.

The report on the HK$2.80 per share floor price means AgBank plans to raise a minimum of $9.14 billion on the Hong Kong Stock Exchange. As the IPO heads into its final stretch, the bank's ability to raise the $23 billion appears to be getting further from its reach. Just over half of the total offering will be on the Hong Kong Exchange.

An unnamed person involved in the deal was quoted by the newspaper as saying the suggested Shanghai A-share IPO price was 2.60-2.70 yuan ($0.38-$0.40). Pan was cited as saying the A-share price was basically set.

The bank started premarketing the IPO to potential Chinese investors last week and is scheduled to begin taking subscriptions on July 1, before setting the IPO price on July 7.

The list of so-called cornerstone investors for the Hong Kong offering became final on Wednesday, according to two sources who sent a list of the final group.

That group, which includes funds from Qatar and Kuwait, Australian, Dutch and British corporates, a Singapore bank and U.S. conglomerate Archer Daniels Midland, has committed to $5.45 billion of the Hong Kong IPO. That comprises nearly half of the roughly $12 billion it hopes to raise in Hong Kong, a much higher than normal amount of cornerstone investors.

Such investors commit to a deal before it prices in exchange for preferential shares. They give confidence and financial backing to the offering before the underwriters market the deal to the major mutual funds across the globe.

AgBank, headed by 53-year-old war hero Xiang Junbo, has said it hoped to wrap up pricing consultations with potential investors on Wednesday.

The Hong Kong portion of the IPO aims to raise up to $14.4 billion, including a 15 percent overallotment option, according to a term sheet obtained by Reuters.

The Hong Kong listing, expected on July 16, a day after the shares debut in Shanghai, had already signed up Asia's third- and fourth-richest individuals as cornerstone investors, according to a report.

AgBank, founded in 1951 by Mao Zedong as the central bank's rural arm, hopes to top Industrial and Commercial Bank of China's <1398.HK> <601398.SS> record $21.9 billion IPO in 2006.

(Additional reporting by Farah Master in SHANGHAI; Michael Flaherty, Denny Thomas, Daisy Ku and Maggie Lu Yueyang in HONG KONG; Editing by Jason Subler, Chris Lewis, Ian Geoghegan and Erica Billingham)