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UBS, DBS said among buyers in US$6.5b China Post deal
[HONG KONG] Postal Savings Bank of China Co, which has the most outlets of any lender in the nation, is nearing an agreement to raise more than US$6.5 billion from investors including UBS Group AG and Temasek Holdings Pte ahead of a planned initial public offering, people familiar with the matter said.
UBS is seeking to invest about US$2.5 billion and may syndicate a significant portion of that stock to other investors, the people said, asking not to be identified before an announcement. Singapore's DBS Group Holdings Ltd is buying about US$250 million of shares, while International Finance Corp and JPMorgan Chase & Co will also invest, the people said.
Postal Savings Bank is selling about a 15 per cent stake to outside investors, according to the people, as Chinese President Xi Jinping seeks to introduce more market discipline to state- owned enterprises. Some foreign investors were attracted to the bank, which was set up in 2007, because of its relatively clean balance sheet with few legacy bad-loan issues, one of the people said.
The Beijing-based bank is still finalizing the allocations for the group of Chinese and domestic investors, one person said. It plans to make an announcement as soon as next week, and the total allocation could rise to US$7 billion or more as commitments come in, the people said.
Alibaba, Tencent Chinese investors include Alibaba Group Holding Ltd's financial affiliate, Zhejiang Ant Small & Micro Financial Services Group Co, as well as China Life Insurance Co, and Tencent Holdings Ltd, the people said. China Telecommunications Corp may also take a stake, pending approval from Postal Savings Bank, one of the people said. Spokesmen at those firms were either not reachable or couldn't provide an immediate comment.
A press officer at Postal Savings Bank said she couldn't immediately comment. Representatives for UBS, Temasek, DBS and JPMorgan declined to comment. A Washington-based representative for IFC didn't immediately respond to a request for comment, while several calls and e-mails to IFC's media team in Hong Kong and India went unanswered.
Postal Savings Bank's bad-loan ratio stood at 0.64 per cent at the end of 2014, lower than any of China's listed banks and the sector average of 1.5 per cent as of June 30. The bank said it has 478 million individual customers and close to 40,000 outlets nationwide.
The bank's capital adequacy ratio was 9.56 per cent as of December. China's banking regulator requires non-systemically important banks to have a minimum ratio of 10.5 per cent by the end of 2018.
It has attracted a significant deposit base from China's vast rural population, which it uses as a low-cost source of funds for lending to small businesses and city commercial banks, according to one of the people. The bank, which is an arm of state-owned China Post Group Co, aims to work with some of the investors to help it build out businesses including investment banking, wealth management and micro-finance, the person said. It may sell shares in an overseas initial public offering as early as next year, the people said.
Postal Savings Bank and DBS in January agreed to set up a joint venture consumer finance company, with DBS investing 120 million yuan (US$18.8 million) for a 12 per cent stake.