Temasek buys 1% ICBC stake from Goldman

Singapore state investor Temasek has bought US$2.3 billion worth of ICBC's Hong Kong-listed shares from seller Goldman Sachs, piling into three of China's top four banks and raising its bet on the world's second-biggest economy.

Singapore state investor Temasek has bought US$2.3 billion worth of ICBC's Hong Kong-listed shares from seller Goldman Sachs, piling into three of China's top four banks and raising its bet on the world's second-biggest economy.

Temasek was burned by its financial industry exposure in 2008, hit by stakes in large European and US banks that plunged in the crisis. But it has kept nearly 40 percent of its investment portfolio in banks it feels are strong and are capturing emerging market growth.

The deal for ICBC takes Temasek deeper into China's banking industry, which has grown to a sector that holds four of the world's top 10 banks by market value.

Ding Wei, Temasek's China head, yesterday said it bought into ICBC because the price was "reasonable" and the state investor was positive on the bank and China's long-term development.

Temasek already owns stakes in China Construction Bank and the Bank of China. China assets accounted for 20 percent of its portfolio as of March 2011.

"Temasek has laid out its strategy before on where it thinks growth is. Within Asia, China anchors the growth, so Temasek is putting money where its mouth is," said Song Seng Wun, an economist at CIMB.

The latest purchase was of 3.55 billion H shares, or 1 percent, of the Industrial and Commercial Bank of China, the world's largest by market value.

A Temasek spokesman said the investor now has a 1.3 percent stake in ICBC. This includes ICBC shares that the state investor owns directly as well as various other stakes held by Temasek-linked companies.

China's banking industry has come under fire lately, as customers and politicians have cried out that the sector's massive profits are coming at the expense of citizens. Low deposit rates, coupled with steady customer fees are at the heart of the protests.

Goldman's block trade is in line with its plan to reduce its stake in ICBC, which it bought into prior to the Chinese bank's 2006 IPO. After the sale, its fourth, Goldman has roughly US$3 billion of ICBC shares remaining.

Goldman sold the Hong Kong-traded shares of ICBC at HK$5.05 (65 US cents) each, or a 3.1 percent discount to Friday's closing price. The other, roughly US$200 million worth of shares were sold to other institutional investors, according to a source.

Goldman first bought 4.9 percent of ICBC for US$2.6 billion before the 2006 IPO, which was then the world's biggest public offering.