Temasek reduces holdings in Bank of China, China Construction Bank

Fullerton Financial Holdings, a unit of Temasek, put 5.19 billion shares in Bank of China up for sale, priced at HK$3.60-3.67 apiece, which represented a 4.9-6.7% discount on the previous closing price. Two other Temasek vehicles, Cairnhill Investments and Crescent Investments, offered 1.5 billion shares in China Construction Bank at HK$6.22-6.35, a 2-4% discount on the stock's last close. Apparently the price was fixed at the bottom of the indicative range in both cases.

The sovereign wealth fund is now prohibited from selling any further shares for three months.

Temasek is scheduled to release its annual report later this month, and it is likely to show a concerted effort to diversify away from the financial sector. The fund has already exited stakes in Barclays and Bank of America Merrill Lynch (BoAML) that were picked up during the global financial crisis. It sold its 9.6% holding in Korea's Hana Financial in October, raising $603 million, although it did participate in Agricultural Bank of China's IPO.

Recent non-financial sector investments include Huaneng Group Corp.'s renewable energy unit and Canada's Inmet Mining Corp.

The CCB sale would represent a rapid in turnaround in Temasek's position: Less than a year ago it agreed to buy a $1.55 billion stake in the bank through a rights issue. As part of the deal it also acquired BoAML's rights.

China's banks have come under selling pressure recently due to concerns about the country's macroeconomic environment as well as unanswered questions relating to state-owned banks' exposure to local government debt.

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• Topics
• Exits
• Greater China
• Financials
• Southeast Asia
• Temasek Holdings
• Bank of China
• CCB
• Bank of America Merrill Lynch
• Hana Financial