Goldman offloads part of its stake in ICBC
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China Daily, November 10, 2011
Goldman Sachs Group Inc is raising as much as $1.54 billion by selling part of its stake in Industrial & Commercial Bank of China Ltd. The sale comes after shares of the nation's largest lender rebounded from a near three-year low.
Goldman Sachs is offering 2.4 billion shares in ICBC at HK$4.88 (63 cents) to HK$5 each, according to terms for the transaction obtained by Bloomberg News. That's a discount of as much as 6 percent to Beijing-based ICBC's closing price in Hong Kong on Wednesday.
ICBC shares have jumped 48 percent to HK$5.19 since falling to HK$3.50 on Oct 4, the lowest since March 2009. Chinese bank stocks rallied in October after the government started buying shares in State-owned lenders that had been pummeled by concerns that bad loans may increase.
The sale marks Goldman Sachs's third divestment of shares in ICBC, as the New York-based firm trims an investment it first made in 2006 before the Chinese bank's IPO. Lenders, including Bank of America Corp, have also cut their stakes in Chinese lenders, unwinding bets that earned them billions of dollars in profits.
Goldman Sachs will own 7.9 billion shares in ICBC after the sale, according to data compiled by Bloomberg.
Goldman Sachs sold 3.04 billion ICBC shares at HK$5.74 each in September 2010, raising about HK$17.5 billion. The company sold a stake in ICBC worth almost $2 billion in June 2009, the maximum number of shares it was free to divest at the time, as it repaid US government bailout funds.
ICBC President Yang Kaisheng said the Chinese bank understands and respects Goldman Sachs' decision to sell its shares in the lender.
Goldman's plan to sell the shares isn't a reflection of its valuation of ICBC's stock, Yang told reporters in Beijing on Wednesday. The sale was to raise funds for internal "adjustments" Goldman is undertaking, Yang said.
Central Huijin Investment Ltd, a unit of China's sovereign wealth fund, began buying shares in the nation's four biggest banks on Oct 10. The move spurred a rally in Chinese banking stocks.
Goldman Sachs bought 4.9 percent of ICBC for about $2.59 billion in 2006, according to a regulatory filing. Goldman Sachs booked a third-quarter loss of $1.05 billion on its investment in ICBC, the US bank said in its Oct 18 earnings report.
