People walk past a sign outside a branch of Postal Savings Bank of China in Beijing. The PSBC said it had raised $7bn from a 17% stake sale that attracted 10 strategic investors, including UBS Group and JPMorgan ahead of an initial public offering planned for next year.
Reuters
Beijing
Postal Savings Bank of China (PSBC) said it has raised about $7bn by selling a 17% stake to investors including UBS Group AG and JPMorgan, ahead of a multi-billion dollar initial public offering next year.
The sale marks the single biggest private fund-raising in China’s financial industry with the 10 investors attracted to the bank’s customer base of almost 500mn – larger than the population of the US.
Investing in Chinese banks ahead of their public floats has also reaped billions of dollars in profits for Western banks in the past.
The presence of big name investors, including Alibaba’s Ant Financial unit, Tencent Holdings and Canada Pension Plan Investment Board (CPPIB), bodes well for the IPO, which bankers have said could raise between $12bn and $15bn, likely one of the world’s biggest next year.
Mark Machin, head of International for CPPIB which invested around $500mn, said key elements of PSBC’s appeal included the biggest distribution network of any lender in China, its exposure to less developed rural areas and focus on consumer lending as well as low levels of non-performing loans.
“It’s a loan book skewed to the retail sector, rather than the high risk corporate sector and that’s its attraction for us,” he added. The deal values China’s sixth-biggest lender by assets at about $41.5bn. It was struck at slightly above 1 times price-to-book ratio, and the lender will use much of the funds to strengthen its capital, bankers said, declining to be identified as they were not authorised to speak on the matter.
Other investors included China Life Insurance Co , which said it subscribed to about $2bn worth of shares, as well as Singapore’s DBS Group, China Telecom Corp the World Bank’s International Finance Corp.
Singapore state investor Temasek also participated, saying it was confident in the long-term prospects of the Chinese economy.
UBS and JPMorgan said in separate statements they would undertake strategic cooperation with PSBC, leveraging their global commercial and investment banking networks, as well as providing services to China’s increasingly affluent population.
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. It had 6.8tn yuan ($1.06tn) in assets at the end of September and a non-performing loan ratio of 0.82%, half the average ratio of 1.59% for China’s commercial banking sector.
It reported after-tax profit of 32.57bn yuan in 2014, according to a stock exchange filing by China Life.
PSBC President Lu Jiajin declined at a briefing yesterday to provide a timeline for the lender’s IPO or its likely size.
