China's Postal Savings Bank may file for HK IPO

The Postal Savings Bank of China has more than 40,000 branches nationwide, including this one in Beijing, and has about 500 million customers.
The Postal Savings Bank of China has more than 40,000 branches nationwide, including this one in Beijing, and has about 500 million customers. PHOTO: REUTERS

Share offering worth up to $11b expected to be world's biggest listing this year

HONG KONG • China's Postal Savings Bank, the nation's biggest lender by number of branches, may file for a Hong Kong IPO worth up to US$8 billion (S$10.8 billion) next week, people close to the deal said, in what is expected to be the world's biggest listing of the year.

While the offering has come down in size from the US$15 billion ceiling mooted in December due to a slide in Hong Kong stocks, it is expected to draw much investor interest by virtue of its huge customer base and as it is considered to have a much lower ratio of bad loans than rivals.

Postal Savings Bank of China (PSBC), the last of China's major state-owned banks to list, saw big-name investors such as Alibaba's Ant Financial unit and Canada Pension Plan Investment Board invest in a fund-raising round late last year that valued it at about US$41 billion.

The bank is still waiting for some final approvals before deciding on the exact day of the filing, said the people, who declined to be identified as details of the offering have not been formally announced.

The deal could raise between US$7 billion and US$8 billion, they said, surpassing by far the biggest IPO so far this year, a US$2.6 billion deal from Danish utility Dong Energy.

PSBC, which has about 500 million clients or nearly half of China's population, did not immediately reply to a Reuters request for comment on its IPO plans.

The deal would also give a much-needed boost to IPO activity in Hong Kong which, like other major financial centres, has seen new listings decline amid concerns over the United States Federal Reserve raising interest rates, a slowdown in China and the possibility of Britons voting in favour of leaving the European Union next week.

While most large Chinese banks trade at prices below their book value, PSBC plans to sell shares close to book value, the sources added.

"You could argue that their (loan) portfolio is better than other banks', so asking for book value would be a fair price," a person close to the deal said.

PSBC, which has more than 40,000 branches nationwide, was set up as a deposit-taking bank in 2007, using the network of the former postal savings bureau.

Meanwhile, China Development Bank Financial Leasing is in talks to sell stock to China Three Gorges Corp and China State Shipbuilding Corp in its Hong Kong initial public offering, which could raise about US$1 billion, according to people with knowledge of the matter.

CDB Leasing, a Shenzhen-based aircraft, infrastructure and ship lessor, plans to allocate about 70 per cent of the share sale to cornerstone investors, the people said.

The offering will be the city's second major listing from a leasing company this year after BOC Aviation's US$1.1 billion share sale last month.

First-time share sales in Hong Kong have raised US$5.6 billion this year, less than half of the US$13.4 billion of deals priced in the same period last year, according to data compiled by Bloomberg.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on June 18, 2016, with the headline 'China's Postal Savings Bank may file for HK IPO'. Print Edition | Subscribe