The Postal Savings Bank of China listed on the Hong Kong stock exchange on Wednesday in the world's biggest IPO in two years. The offering is expected to revive the sluggish IPO market.
The Postal Savings Bank of China kicked off its initial public offering on Wednesday in Hong Kong. The PSBC is one of the largest consumer banks in China. It issued over 12 billion new shares at HK$ 4.76 each, raising HK$57.6 billion,or about 7.4 billion US dollars.
The IPO is the world's largest since Alibaba went public in 2014. The bank said it plans to use the funds to bolster its balance sheet and fund future lending growth.
Chairman of PSBC, Li Guohua, said, "Listing in Hong Kong - the international capital market, can help us improve our management level. We will stick to our position as a large commercial retail bank, and continue to serve the farmers, the small enterprises and community. We are optimistic about our future development."
The vast majority of the deal is covered by cornerstone investors. That could hurt liquidity for IPOs because once the shares start trading, the stock will be locked up for a minimum of six months. Some worry that might have limited appeal for investors, but experts say the IPO still hold great investment value.
Managing director of Munsun Capital Group, Sean Xiang Yuqiu, said, "It's the fifth largest bank in China by total assests, the largest bank in China by the total number of branches. 40,000 branches across the nation. So it's really a very big quality bank. The NPR ratio is incredibly low at 0.8 percent, nearly half of the national level. Its loan to deposit ratio is just 40 percent, representing strong growth in the future. In terms of the retail customer base, it has 500 million retail customers, nearly one third of the nation's population. So definitely it's a great bank, better quality, better growth compared to its peers."
PBSC'S offering comes at a difficult time, as Asia-Pacific stocks have been hit by volatile markets, China's economic growth is slow, and the recent Brexit vote and U.S. presidential election are fuelling overall uncertainty. Still, the market response remains strong.
The PSBC's debut has attracted the attention of many investors. Most of them believe the mega offering means a lot to Hong Kong's IPO-starved market and think it can also be a litmus test for investor sentiment towards China.
