• Inside Labour

    Terry Bell explores the connection between poultry, poverty and desperation.

  • A new ANC sweeper?

    Have the Guptas' new auditors mastered how to look the other way on cue, asks Solly Moeng.

  • Strategy for the big boys

    Formulating strategy across the span of huge companies is a marathon, says Ian Mann.

All data is delayed
See More

Goldman sells ICBC shares

Apr 16 2012 10:36
Hong Kong/Singapore - Singapore state investor Temasek bought $2.3bn worth of ICBC’s Hong Kong-listed shares from seller Goldman Sachs , piling into three of China’s top four banks and raising its bet on the world’s second-biggest economy.

Temasek was burned by its financial industry exposure in 2008, hit by stakes in large European and U.S. banks that plunged in the crisis. But it has kept nearly 40 percent of its investment portfolio in banks it feels are strong and are capturing emerging market growth.

The deal for ICBC takes Temasek deeper into China’s banking industry, which has grown from insolvency six years ago to a sector that holds four of the world’s top ten banks by market value.

Ding Wei, Temasek’s China head, told Reuters it bought into ICBC because the price was “reasonable” and the state investor was positive on the bank and China’s long term development.

Temasek already owns stakes in China Construction Bank and Bank of China . China assets accounted for 20 percent of its portfolio as of March 2011.

“Temasek has laid out its strategy before on where it thinks growth is. Within Asia, China anchors the growth, so Temasek is putting money where its mouth is,” said Song Seng Wun, an economist at CIMB.

The latest purchase was of 3.55 billion H-shares, or about 1 percent, of Industrial and Commercial Bank of China, the world’s largest bank by market value.
Temasek now has a 1.3 percent stake in ICBC, a Temasek spokesman said.

This includes ICBC shares that the state investor owns directly as well as various other stakes held by Temasek-linked companies.

China’s banking industry has come under fire lately, as customers and politicians have cried out that the sector’s massive profits are coming at the expense of citizens. Low deposit rates, coupled with steady customer fees are at the heart of the protests.

Stake overhang

Goldman’s block trade is in line with its plan to reduce its stake in ICBC, which it bought into prior to the Chinese bank’s 2006 IPO. After the sale, its fourth, Goldman has roughly $3 billion of ICBC shares remaining.

Goldman sold the Hong Kong-traded shares of ICBC at HK$5.05 each, or a 3.1 percent discount to Friday’s closing price. The other, roughly $200 million worth of shares were sold to other institutional investors, according to a source.

Hong Kong shares of ICBC, which has a market value of $240 billion, fell as much as 1.7 percent early on Monday but pruned the losses to be down 0.8 percent in the afternoon, in line with the broader market.

Its shares are up about 12 percent so far this year, in line with a similar rise on the benchmark Hang Seng Index.

Besides Goldman, American Express is the only major foreign financial institution that holds shares in ICBC. Amex holds about 638 million shares in ICBC, or less than 1 percent of the bank’s Hong Kong-listed shares.

“The sale does not affect ICBC at all, and the overhang will be removed when Goldman disposes off the remaining (ICBC shares) hopefully in one go,” said Sanjay Jain, head of Asian financials research at Credit Suisse.

Temasek’s financial services portfolio includes stakes in Singapore’s DBS Group, Indian lender ICICI Bank and Standard Chartered .

Bank of America, RBS and UBS are among the foreign banks that have sold large stakes in Chinese banks over the past few years. Such sales have been an attractive way to raise capital or reduce earnings volatility.

Goldman first bought 4.9 percent of ICBC for about $2.6 billion before the 2006 IPO, which was then the world’s biggest public offering.

The latest stake purchase comes after Temasek, which manages about $150 billion in assets, raised about $800 million since the start of the year in three significant selldowns in its portfolio companies. This included a 1.4 percent stake sale in ICICI Bank.

Temasek is also selling its 67.4 percent stake in Indonesia’s Bank Danamon to DBS in exchange for DBS shares, in a deal that is awaiting regulatory approval.
icbc  |  goldman sachs  |  china economy



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're talking about:


Marketing is a big concern in SA's small business community, followed by a lack of confidence and partnering with the wrong people, according to a survey.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The drop in inflation:

Previous results · Suggest a vote