The Postals Savings Bank Of China (PSBC) is looking to raise money by listing its shares in Hong Kong. The listing is expected to be the largest stock sale of the year, with the bank expecting almost $8bn(£6bn) to roll into its coffers after the sale.
The listing will also be the largest since 2014, when Alibaba — another Chinese entity –raised $25bn in New York in 2014. Meanwhile, PSBC doesn’t need to worry about whether it’s shares will sell or not as almost 72 percent of the shares have already been subscribed to by a group of six cornerstone investors.
Cornerstone investors, in case you are unfamiliar with the term, refers to investors who subscribe to a listing ahead of the public stock market opening. They manage this by consenting to buy a certain number of shares and agree to hold them for a minimum period of time.
PSBC is China’s largest bank in terms of number of branches — with over 40,000 of them spread across the breadth of China — and the 5th largest in terms of lending capability. Ironically, the fact that it is one of the country’s largest lenders may have played a part in forcing it to go for a public listing as the number of bad loans in China rise rapidly. There has also been a slowdown in China’s economy of late and the PSBC is probably hoping that the listing will help it raise some funds to keep the ball rolling.
Meanwhile, Bank of America Merrill Lynch, China International Capital Corp, Goldman Sachs, JPMorgan and Morgan Stanley are reportedly among those who have been chosen to sponsor the IPO. PSBC is said to be paying a 1.1 percent underwriting commission and an up to 0.5 percent incentive fee for underwriters of the IPO, equating to an amount well over $100 million.
Although shares aren’t really the best way to raise money at present. With Hillary Clinton and Donald Trump leaving everyone confused as to the next president, with the UK uncertain of its future status in the EU and various other events, the stock markets are pretty volatile. However, with 72 percent of stock already booked, PSBC will probably manage to offload the remaining 28 percent.
SIC Investment One Limited, Shanghai International Port Group, Victory Global Group and the overseas investment arm of State Grid are part of the group of six cornerstone investors that are buying almost $5.86 billion worth of shares.