* Temasek now owns 1.3 percent of ICBC
* It also owns stakes in China Construction, Bank of China
* Goldman has been trimming its stake in ICBC
* ICBC shares down 0.8 pct at midday, in line with big board
By Michael Flaherty and Saeed Azhar
HONG KONG/SINGAPORE, April 16 (Reuters) – Singapore state
investor Temasek bought $2.3 billion 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.
