why preference shares are called hybrid form of financing?

Hybrid refers to a thing which is made up of two or more elements. In other words, it refers to a thing that has the characteristics of two or more elements. 

Preference shares are called hybrid shares because they carry the characteristics of both debt and equity. Like debt, preference shares carry a fixed rate of return. Like equity shares, the holders of preference shares receive dividend only if anything is left after paying the debt holders.