Temasek confirms increase in CCB holding

Temasek bought 3.77 billion H-shares in CCB at HK$4.93 apiece. On November 11 and November 14, BofA sold 10.4 billion shares - representing approximately 4.14% of CCB's total share capital - for nearly $6.6 billion, reducing its holding in the lender to 0.86%. It was reported that Temasek and several Chinese institutions were the buyers.

China Investment Corp. said last week that it had increased its stake in CCB to 60.46% from 59.31% after buying 2.76 billion of the shares put up by BofA with a total transaction volume of $1.75 billion.

BofA paid $3 billion for a 9.9% stake in CCB ahead of the bank's IPO in 2005. In August, BofA sold a 5% stake to a consortium that included China's State Administration of Foreign Exchange, the National Council for Social Security Fund and CITIC Securities for $8.3 billion. This reduced BofA's holding to approximately 5% and saw Temasek become the Chinese bank's second-largest shareholder.

One month earlier, the Singaporean sovereign wealth fund 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, a higher price than those at which it subsequently bought back in.

It was assumed Temasek's original divestment was part of wider efforts to ease its exposure to financial services. However, with the shares in China's major state-owned banks trading at levels not seen since the global financial crisis, the sovereign wealth fund appears to have decided that the financial opportunity outweighed the diversification imperative.

In October, Central Huijin Investment, the unit of CIC responsible for holdings in the country's major state-owned banks, bought shares in these lenders to boost valuations. It took similar action in September 2008 as credit markets froze in response to the Lehman Brothers collapse.

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• Topics
• Financials
• PIPEs
• Greater China
• Southeast Asia
• China
• CCB
• Temasek Holdings
• PIPE
• Financial Services
• Singapore
• Sovereign wealth fund