Temasek to take part in Chinese bank's stake sale

This PSBC branch in downtown Beijing is one of the lender's 40,000 branches which serve around half a billion customers. PSBC has the most branches among Chinese banks.
This PSBC branch in downtown Beijing is one of the lender's 40,000 branches which serve around half a billion customers. PSBC has the most branches among Chinese banks.PHOTO: REUTERS

PSBC to sell 16.92% of private stake to 10 global strategic partners ahead of IPO

Singapore investment firm Temasek, the biggest foreign investor in Chinese banks, will further raise its profile in the country's financial sector by taking part in Postal Savings Bank of China's (PSBC) private fund-raising exercise.

PSBC will sell 16.92 per cent of its stake to 10 global strategic partners, including financial institutions such as JP Morgan Chase, UBS Group, Temasek Holdings and Alibaba-owned Ant Financial.

The stake sale, raising US$7.06 billion (S$9.93 billion), comes ahead of a planned initial public offering (IPO) by the Chinese lender.

"This is not only a win-win partnership between PSBC and strategic investors, but a great example of beneficial cooperation between China and the rest of the world," said PSBC president Lyu Jiajin.

All 10 investors are investing between US$250 million and US$500 million in this exercise, according to industry sources.

China Life Insurance, China's largest life insurer, announced on Tuesday night that it will buy 3.34 billion shares of PSBC for 13 billion yuan (S$2.8 billion) fully in cash.

The private fund-raising is seen as a strategic step before the IPO, which is expected to take place in Hong Kong next year.

The bank was formed in 2007 after the Chinese government looked to boost financial services in rural sectors. It has 40,000 branches, the most of any Chinese lender, and serves around half a billion customers.

The bank's total assets reached 6.8 trillion yuan in September despite the bad loans ratio rising for the past three years, hitting 0.64 per cent by the end of 2014.

Temasek has been keeping faith with Chinese financial institutions even though the overall Chinese equity markets have taken a beating since the middle of the year.

Soon after the slump in Chinese equities in August, the investment firm raised its stake in the Industrial and Commercial Bank of China (ICBC) to 10 per cent of the company's Hong Kong-listed shares. The Singapore investment company spent HK$141 million (S$25.6 million) to buy 30 million ICBC H shares at an average HK$4.696 a share.

A version of this article appeared in the print edition of The Straits Times on December 10, 2015, with the headline 'Temasek to take part in Chinese bank's stake sale'. Print Edition | Subscribe