State-owned telecommunications company China Mobile will sell its entire stake in China International Capital Corp (CICC), a leading domestic investment bank, to at least one unidentified buyer in a deal worth $59 million, Reuters reported Wednesday.
China Mobile will sell 37.7 million shares, which represents a 2.48 percent stake in CICC.
The sale price is HK$11.85 ($1.53) to HK$12.09 per share, representing a discount of up to 4.13 percent based on CICC's closing of 12.36 yuan ($1.85) on Tuesday, Reuters said, citing a deal term sheet.
China Mobile was one of the cornerstone investors for CICC's IPO in Hong Kong in November 2015. The mobile operator bought the 37.7 million shares it's now selling at HK$10.28 each.
China Mobile did not respond to interview requests from the Global Times as of press time. Calls to CICC's public relations office were unanswered.
In Hong Kong, China Mobile's shares closed at HK$91.3, up 0.22 percent from Tuesday. However, CICC shares fell 1.94 percent at HK$12.1.
Xiang Ligang, CEO of telecommunication industry portal cctime.com, said stock price fluctuations reflect market speculation on CICC's profitability and they won't last long.
The deal is just "a normal financial adjustment" by China Mobile, Xiang said.
"China Mobile has a pool of money. It has around 400 billion yuan in free cash … which means the telecommunication giant's move is not aimed at cashing out," Xiang told Global Times on Wednesday.
Xiang also noted that the deal reflects a recent strategic shift of China Mobile's investment flows, although it is not clear where investments may go in the future.
