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Goldman Sachs to Sell $2.5Bln of ICBC Shares to Temasek

04-16 16:02 Caijing
Temasek will pay 2.3 billion U.S. dollars (about 18 billion Hong Kong dollars) for 3. 55 billion shares, or 5.3 percent of ICBC’s H-shares.

Goldman Sachs plans to cash in 2.5 billion U.S. dollars by selling part of its stake in Industrial & Commercial Bank of China Ltd., most of which will be bought by Singapore state-owned investment group Temasek Holdings Pte.

Under the deal, which is expected to close on Wednesday, Goldman Sachs is selling ICBC shares at 5.05 Hong Kong dollars each, a 3.07 percent discount against 5.21 HK dollars’ closing last Friday, according to its offering documents.

Temasek will pay 2.3 billion U.S. dollars (about 18 billion Hong Kong dollars) for 3. 55 billion shares, or 5.3 percent of ICBC’s H-shares. The rest 200 million U.S. dollars or so will be subscribed by institutional investors, Reuters quoted sources as reporting.

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

Shares of the world’s biggest bank by market value fell to an intraday low of 5.12 Hong Kong dollars Monday, and dropped 1.34 percent before closing at 5.14 Hong Kong dollars. The bank has accumulated a loss of 8.4 percent since it peaked on Feb. 29. Data compiled by Bloomberg shows that the stock trades at 6.4 times estimated earnings, down from a multiple of 9.9 a year earlier.

After the deduction, Goldman Sachs still holds roughly 3.3 billion U.S. dollars of ICBC shares, reducing its stake to less than 5 percent.

The global bank has cut ICBC shares for the fourth time since its purchase began in 2006. It raised 1.1 billion U.S. dollars via last December’s sale at 4.88 Hong Kong dollars each.

Global banks including Goldman Sachs, Bank of America and Royal Bank of Scotland have divested about 24 billion U.S. dollars of investments in Chinese lenders since 2009, in order to replenish capital to meet tighter regulation.

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