PSBC issues US$7.25 billion preference shares

Postal Savings Bank of China issued US$7.25 billion offshore preference shares, marking the lender’s another big funding move after its IPO last year. 

Postal Savings Bank of China (PSBC) Co Ltd, the mainland's sixth largest bank by asset size, raised 47.8 billion yuan (US$ 7.25 billion) by issuing a non-cumulative perpetual offshore preference shares yesterday, according to its filing with the Hong Kong Stock Exchange.

The interest rate of the equities was priced at 4.5 percent. The shares will have a par value of 100 yuan each according to regulatory requirements and are perpetual with no maturity date.

Up to 30 percent of subscriptions of the shares came from international investors, said the press release of the bank. Huarong International Financial Holdings Limited was allocated with a total subscription amount of US$90 million, at an issue price of 100 percent of US$20 per share, according to an announcement of the company with the Hong Kong Stock Exchange.

This issuance aimed to replenish the bank's additional tier 1 capital, thereby improving its capital structure, said the filing.

Last month, the Hong Kong-listed bank received the approval from China Banking Regulatory Commission concerning its non-public issuance of not more than 500 million offshore preference shares to raise total proceeds no exceeding 50 billion yuan.

Preference shares, known as preferred stocks, are a long-term source of finance for a company. Unlike common shares, they are ranked between equity and debt as far as priority of repayment of capital is concerned. Shareholders of this type of stock will enjoy priority rights over ordinary shareholders in sharing of profits and claims over assets of the firm.

The lender raised up to US$7.4 billion through its listing in Hong Kong last September, making it the world's biggest initial public offering since internet giant Alibaba was listed in New York in 2014. It is planning to raise some 5.17 billion yuan through a second offering in the Shanghai Stock Exchange, according to previous media reports.

Founded in 2007, the bank is now the country’s largest lender by retail network, with a presence in around 70 percent of China's rural areas.

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