State-owned Postal Savings Bank of China (PSBC) on Tuesday launched an IPO in Hong Kong worth up to $8.1 billion, with the vast majority of the deal covered by cornerstone investors.
The group of six cornerstone investors will buy as much as $5.86 billion worth of stock on offer, or about 72 percent of the IPO, underscoring tepid demand for Hong Kong offerings from -retail investors and fund -managers in the city.
That would put it near the record 77 percent cornerstone tranche for the $810 million listing of China Development Bank Financial Leasing Co in July.
Large investments by cornerstone investors hurt liquidity for IPOs once the shares start trading, as the stock is locked up for a minimum of six months.
The cornerstone money can also pressure the stock as the expiration of the lockup period nears.
The PSBC, China's largest bank by number of branches, is offering 12.1 billion new shares in an indicative range of HK$4.68 ($0.6) to HK$5.18 each, according to a term sheet seen by -Reuters.
The two largest cornerstone investors, CSIC Investment One and Shanghai International Port Group, agreed to invest $2.2 billion and $2.1 billion respectively. Victory Global Group, a unit of aviation conglomerate HNA Group, will buy $1 billion of shares, while other cornerstone investors will buy smaller stakes.
The PSBC did not immediately reply to a Reuters request for comment on the IPO terms.
The IPO will be priced on September 20, with its debut on the Hong Kong stock exchange set for September 28.
The PSBC also said it plans to issue $7.5 billion in bonds to bolster its balance sheet, according to a report by Reuters on September 4, citing a securities filing.
The bank said its total assets rose 9.3 percent to 7.97 trillion yuan over the six months through June because of increases in its loan and investment portfolios, and deposits with the central bank, according to Reuters.
Its nonperforming loan ratio dipped to 0.78 percent at the end of June from 0.80 percent six months earlier, the PSBC said.
