BLBG:Goldman Sachs Said to Raise $2.5 Billion in ICBC Sale
Temasek Holdings Pte (TMSK) is buying part of Goldman Sachs Group Inc. (GS)’s stake in Industrial & Commercial Bank of China (601398) Ltd., adding shares of China’s biggest bank to holdings that include two of the nation’s largest lenders.
The Singapore state-owned investment group said it is buying 3.55 billion shares, or 4 percent of the Hong Kong-traded shares in the world’s biggest bank by market value, to lift its stake. Goldman Sachs is selling $2.5 billion of shares at HK$5.05 each, according to two people with knowledge of the matter. Temasek paid $2.3 billion for the stock, based on the per-share price and stake size.
Temasek has been increasing holdings in China Construction Bank Corp. (939) and Bank of China Ltd. (3988) as global banks including Goldman Sachs, Bank of America Corp., and Royal Bank of Scotland Group Plc divested about $24 billion of investments in Chinese lenders since 2009.
“Temasek’s underlying strategy is investing in growth areas like China and key sectors like banks and this is essentially an opportunity that came up,” said Song Seng Wun, a regional economist at CIMB Research Pte in Singapore. “Asia is likely to lead the growth in the near-to-middle term, so all these deals are essentially to anchor that, and banks are basically the lifeline and heart of any economy.”
The price is a 3.1 percent discount from the HK$5.21 close of ICBC shares on April 13. The purchase came as the stock fell 8.4 percent from their Feb. 29 peak this year.
ICBC Shares Decline
ICBC shares dropped 0.8 percent to HK$5.17 at the midday break in Hong Kong, the first decline in three days. The stock trades at 6.4 times estimated earnings, down from a multiple of 9.9 a year earlier, according to data compiled by Bloomberg.
Temasek, which managed S$193 billion ($154 billion) as of March 2011, said in a statement today that the purchase will give it a deemed interest of 5.3 percent in the Hong Kong-listed shares of ICBC, which includes stakes held by its units and associates.
The deal represents about 40 percent of Goldman Sachs’ 8.78 billion shares of ICBC as of Dec. 31, according to data compiled by Bloomberg. The fifth-largest U.S. bank remains ICBC’s second- biggest investor, based on the shareholding data of the bank’s Hong Kong-traded stock.
Goldman Sachs’ stake in Beijing-based ICBC generated a $517 million pretax loss in 2011 compared with a $747 million gain a year earlier, the firm disclosed on Jan. 18. Goldman Sachs, which acquired its ICBC stock in 2006, doesn’t report other stock investments in Asia in its annual filing.
Continuing Trend
Citigroup Inc. (C) last month sold its entire stake in Shanghai Pudong Development Bank Co. nine years after the purchase for an after-tax gain of $349 million.
“You’ll continue to see sales of Chinese bank stocks by these banks,” Sandy Mehta, chief executive officer at Hong Kong-based Value Investment Principals Ltd., said by telephone today. “It’s a continuation of the trend. It’s been happening now for a year.”
Shares of ICBC, the world’s largest lender by market value, have rallied more than 40 percent since hitting a 2 1/2-year low in October as concern that Europe’s debt crisis would lead to a further economic slowdown in China eased. ICBC widened its lead as the world’s most profitable lender last month after reporting a 17 percent increase in fourth-quarter net income.
The sale is the fourth and the biggest by value for New York-based Goldman Sachs. The U.S. securities firm in November raised $1.1 billion selling shares in ICBC at HK$4.88 each.
Chinese Bank Shares
Temasek bought 3.77 billion shares of China Construction Bank from Bank of America on Nov. 11, increasing its stake in the second-largest Chinese lender by value. The investment firm also raised its stake in Bank of China, the nation’s fourth biggest, to 7.07 percent from 6.96 percent after buying 97.1 million shares in August.
Temasek is selling its 67 percent stake in PT Bank Danamon Indonesia to DBS Group Holdings Ltd. (DBS), Southeast Asia’s biggest bank said April 2. The state-owned investment company, which is already the biggest shareholder of DBS, will boost its stake in the lender to 40.4 percent from 29.5 percent after taking $4.9 billion of new stock for the transaction.
The percentage of financial services companies in Temasek’s holdings rose to 36 percent from 35 percent as of March 2011, according to the company.
To contact Bloomberg News staff of this story: Joyce Koh in Singapore at jkoh38@bloomberg.net; Fox Hu in Hong Kong at fhu7@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net
