PSBC’s IPO breakthrough saves the deal

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The Postal Savings Bank of China’s (PSBC) US$7.4 billion initial public offering on the Hong Kong Stock Exchange (HKEX) made a crucial breakthrough on the listing rules, said a legal expert involved.

psbcs-ipo-breakthrough-saves-the-dealTim Wang, China co-managing partner of Clifford Chance, told China Business Law Journal that more than 50% of the PSBC’s securities in public hands at the time of listing were beneficially owned by the three largest public shareholders, which violated the listing rules of the HKEX. But the PSBC successfully got an exemption from the exchange.

“The size of its issuance is really huge,” said Wang. “Even if its three largest public shareholders own approximately 53% of securities in public hands, its public float was not seriously affected, as well as its liquidity.”

Wang said it was not surprising that the PSBC raised so much money, as the bank covers a wide range of clients, has a lot of branches, and has a relatively low non-performing loan ratio.

The PSBC’s Hong Kong listing marks the world’s largest IPO this year. It’s also the world’s largest new listing since Alibaba’s US listing in 2014, and Hong Kong’s largest IPO since 2010.

Established in 2007, the PSBC is the youngest large commercial bank in China. As of 31 March 2016, the PSBC’s total assets, total deposits and total loans ranked fifth, fifth and seventh, respectively, among PRC commercial banks. According to The Banker’s list of the “Top 1,000 World Banks”, the PSBC ranked 22nd in the world in terms of total assets as of 31 December 2015.

Legal counsel: Clifford Chance and King & Wood Mallesons acted for the underwriters. The Clifford Chance team was led by partners Tim Wang, Amy Lo and Fang Liu, while the KWM team was led by partners Zhou Ning, Liu Sijia and Su Zheng. Davis Polk & Wardwell, and Haiwen & Partners, acted for the PSBC.

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