China’s Postal Savings Bank seeks up to USD8.1b in IPO

Postal Savings Bank of China Co. is seeking as much as USD8.1 billion in a Hong Kong initial public offering, which could become the world’s biggest share sale this year.
The Beijing-based bank is offering 12.1 billion shares at HKD4.68 to HKD5.18 apiece, according to terms for the deal obtained by Bloomberg yesterday. Cornerstone investors, who commit to hold their shares for six months, agreed to buy about $5.9 billion of stock, accounting for 76 percent of the offering at the midpoint of the marketed range.
The price range values Postal Savings Bank at about 1 to 1.1 times its net assets at the end of March this year, a person with knowledge of the matter said, asking not to be identified as the information is private. Chinese lenders listed in Hong Kong trade at a median 0.88 times their latest book value, data compiled by Bloomberg show.
Postal Savings Bank, ubiquitous in small-town China, joins Bank of Tianjin Co. and China Zheshang Bank Co. in selling shares in Hong Kong to fund expansion. The bank, which has more outlets than any other Chinese lender, 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.
“Even though there are some positives for Postal Savings Bank, the valuation is not attractive enough,” Edmond Law, an analyst at UOB Kay Hian (Hong Kong) Ltd., said by phone yesterday. Investors may prefer the shares of other listed state-owned banks due to their more attractive price-to-book ratios, Law said.
A Hong Kong-based external spokesman for Postal Savings Bank declined to comment on the valuation.
Even at the bottom end of the price range, Postal Savings Bank’s first-time share sale would be the largest globally this year, surpassing the $3 billion offering from Danish utility Dong Energy A/S in June, according to data compiled by Bloomberg. The IPO is set to be the largest globally since e-commerce billionaire Jack Ma’s Alibaba Group Holding Ltd. priced its $25 billion New York share sale in September 2014, the data show. Bloomberg