Thu, Sep 22, 2016 - Page 10 News List

China’s Postal Bank set for US$7.4bn IPO

LOTS OF BRANCHES:Capital Securities analyst Li Bin said that investors may be put off by limits on gains from having the biggest branch network of any Chinese bank

Bloomberg

Postal Savings Bank of China Co (中國郵政儲蓄銀行) is poised to raise US$7.4 billion in a Hong Kong initial public offering (IPO) that would be the world’s biggest first-time share sale this year, people familiar with the matter said.

The Beijing-based lender plans to sell 12.1 billion shares at HK$4.76 apiece, below the midpoint of a marketed range, the people said, asking not to be identified as the information is private.

The bank offered the shares at between HK$4.68 and HK$5.18 each.

The first-time share sale would be the largest globally since Alibaba Group Holding Ltd (阿里巴巴) priced a US$25 billion New York offering in September 2014. Postal Savings Bank would have a market value of US$49.5 billion, more than Deutsche Bank AG, but less than US banks like Goldman Sachs Group Inc.

The largest IPO so far this year was Danish utility Dong Energy AS’ US$3 billion offering in June, data compiled by Bloomberg showed.

Investors could be deterred by a valuation higher than the bank’s peers and limits on the gains to be made from having the biggest branch network of any Chinese bank, said Li Bin, a Shanghai-based analyst at Capital Securities Corp (首創證券).

“Chinese banks are increasing competing online; the value of having an extensive brick-and-mortar branch network has been diminished significantly compared with 10 years ago,” Li said.

Postal Savings Bank has more than 40,000 outlets, its Web site showed.

The bank reported an 11 percent increase in first-quarter profit as it pared provisions for bad loans, pre-listing documents filed with the Hong Kong Stock Exchange.

The price range for the share offer valued the lender at 1 to 1.1 times its net assets as of the end of March. Chinese lenders listed in Hong Kong trade at an average 0.87 times book value, data compiled by Bloomberg showed.

Postal Savings Bank joins Bank of Tianjin Co (天津銀行) and China Zheshang Bank Co (浙商銀行) in selling shares in Hong Kong to fund expansion. The bank boasts a non-performing loan ratio that was less than half the official industry figure at the end of March, and has the potential to use a strong deposit base to grow lending faster than its peers.

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