Standard Chartered Bank

Temasek deal eases StanChart fears over key stake

PUBLISHED : Wednesday, 29 March, 2006, 12:00am
UPDATED : Wednesday, 29 March, 2006, 12:00am

Takeover talk that has dogged emerging-markets lender Standard Chartered for nearly a decade was put to rest yesterday with news that a key 11.55 per cent stake in the British bank is to be bought by Singapore state-backed portfolio investor .

Temasek immediately declared its intention to support the bank as a 'stable shareholder'.

It was welcomed as a 'long-term' holder on to the bank's share register by a relieved management that has been fighting to keep the stake out of banking rivals' hands and maintain the lender's independence.

The deal and subsequent declarations of intent, along with the realisation that the stake had not fallen into a rival's hands, wiped the speculative froth off Standard Chartered's share price - which traded down 59.6 pence, or 3.91 per cent, at 1,464 pence ($198.59) in London following the news.

Temasek said it had agreed to buy the stake from the estate of Singapore tycoon Khoo Teck Puat in a deal that would make it the biggest shareholder of the emerging-markets bank.

The estate said it agreed to sell 152.399 million shares, or 11.55 per cent, of Standard Chartered to a wholly owned subsidiary of Temasek, Dover Investments.

The price of the transaction was not disclosed, but, based on Standard Chartered's closing price in Hong Kong yesterday, the deal would have been valued at about $30.78 billion.

Before the deal, which is subject to regulatory approvals and is expected to be completed in a few months, Temasek directly and indirectly held a stake of about 0.07 per cent in Standard Chartered.

The late billionaire Khoo, together with two other partners, fended off an unsolicited takeover attempt on Standard Chartered by London's Lloyds TSB in 1986 and became the biggest shareholder of the bank.

Since that deal, and Khoo's death in 2004, the disposal of the stake had become the subject of intense debate in the market based on the view that it could be used as a stepping stone for a takeover if it fell into the hands of a rival.

That scenario is now very unlikely, particularly as the private-equity investment arms of Temasek and Standard Chartered enjoy a number of close strategic partnerships.

Temasek said the investment was consistent with its focus on Asia's financial services sector and Standard Chartered would become an important part of this portfolio.

'We will continue to support the company in their quest to deliver sustainable shareholder value,' said Simon Israel, a board member and executive director-designate at Temasek.