Postal Savings Bank of China, the country’s sixth-largest commercial lender by assets, is set to raise about $8 billion ahead of its initial public offering next year by selling a 15% stake to a consortium of heavyweight investors including Li Ka-shing and Alibaba.
The fundraising disclosed on Tuesday follows the decision by the Chinese securities regulator on Friday to lift its ban on IPOs in a sign that the country’s stock markets have stabilised after a rocky summer.
Other investors taking part in PSBC's pre-IPO investment include Singapore sovereign wealth fund Temasek, the International Finance Corporation, and US bank JP Morgan, according to two people familiar with the situation. Besides Alibaba, fellow Chinese internet giant Tencent is also participating in the latest round of private financing.
JP Morgan is investing $400 million on its own behalf, said one of the sources familiar with the situation, who declined to be named due to the confidential nature of the process.
Swiss bank UBS and some of its investors, including Hong Kong tycoon Li Ka-shing and a group of private-equity firms, have pledged a combined $2 billion, the source added.
UBS and JP Morgan each declined to comment on the transaction when contacted by FinanceAsia. Calls to PSBC’s general office went unanswered.
Once the fundraising is complete, the pre-IPO investors will own about 18.5% of the state-owned lender, the biggest Chinese bank by number of branches.
PSBC, controlled by state-owned postal service China Post Group Corp, has about 500 million clients, according to its website. Its assets topped Rmb6.8 trillion ($1.07 trillion) and its non-performing loan ratio was 0.82%, at the end of September this year. Industrial and Commercial Bank of China, the country’s largest lender by assets, by comparison, had 17,122 outlets at the end of 2014 and 465 million retail customers.
The pre-IPO stake sale is a stepping stone that would set a valuation benchmark for the IPO still to come, which will extend a recent global trend that has also seen some of Britain's and, more recently, Italy's and Japan's postal assets come to market.
PSBC's management has sent requests for proposals to investment banks vying to lead the IPO, which is expected to be worth more than $10 billion, the sources familiar with the matter told FinanceAsia.
Speaking at an industry conference in Beijing in July, Xu Xueming, vice governor at PSBC, said the bank would speed up the fundraising from strategic investors before its planned IPO.
Xu at the time did not give any additional information about the likely size of the deal or where and when the IPO will be held.
The deal was led by Morgan Stanley, according to people familiar with the matter.
Additional reporting by Alison Tudor-Ackroyd