Goldman completes third partial exit from ICBC
Goldman Sachs has completed another partial exit from its holding in Industrial and Commercial Bank of China (ICBC), selling $2.5 billion worth of H-shares. Temasek Holdings said it picked up $2.3 billion of the block sale, which amounts to a 1.3% stake in the bank. The remaining shares were reportedly sold to other institutional investors.
Goldman priced the transaction at HK$5.05 per share, a 3.1% discount to Friday's closing price.
ICBC trades in Hong Kong (H-shares) and Shanghai (A-shares). At the end of last year, Goldman and its subsidiaries held 8.77 billion H-shares in the company, equal to 10.11% of total issued H-shares and 2.51% of total issued shares. Following yesterday's partial exit, the investment bank's remaining interest in ICBC is worth approximately $3 billion at current market values.
In November 2011, Goldman divested $1.1 billion worth of shares in the Chinese lender, its third sell down since buying a 4.9% stake in 2006 for around $2.8 billion. It has now generated approximately $7.7 billion through four divestments, comfortably the largest open market exit ever made by a private equity investor in China.
Temasek, meanwhile, is increasing its exposure to China's banking sector. In November of last year, the Singaporean sovereign wealth fund took its holding in China Construction Bank (CCB) to 9.42% from 8.10%, buying a portion of shares from Bank of America alongside several Chinese institutions.
One month earlier, Temasek reduced its holdings in both CCB and Bank of China. It raised around $3.6 billion in the process, of which $1.2 billion came from CCB shares. Two Temasek vehicles, Cairnhill Investments and Crescent Investments, offered 1.5 billion shares in CCB at HK$6.26. It subsequently bought back in at HK$4.93.
It was assumed Temasek's original divestment was part of wider efforts to ease its exposure to financial services. However, with China's major state-owned banks trading poorly - ICBC is down 21% year-on-year - the sovereign wealth fund appears to have decided that the financial opportunity outweighed the diversification imperative.
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