Goldman Sachs raises US$1b in ICBC share sale

US bank sells further stake in mainland lender in long-term move to meet new capital rules

PUBLISHED : Tuesday, 29 January, 2013, 2:21pm
UPDATED : Wednesday, 30 January, 2013, 4:52am

Goldman Sachs has further reduced its stake in Industrial and Commercial Bank of China, raising about US$1 billion from the sale of its Hong Kong-listed shares, two people with direct knowledge of the deal said.

The US bank sold 1.35 billion shares of the mainland's biggest lender late on Monday in a block trade at HK$5.77 per share, a discount of 3 per cent to Monday's closing price, the sources said.

The share offer was two times oversubscribed, and they were allotted to about 100 institutional investors. Goldman raised US$2.5 billion from the sale of ICBC H shares in April last year, of which US$2.3 billion worth was sold to Singapore sovereign wealth fund Temasek.

Edward Naylor, a Goldman spokesman in Hong Kong, said: "We have no immediate plans to sell more shares in ICBC."

Goldman bought a 4.9 per cent stake in ICBC for US$2.58 billion in 2006 before it went public. Taking the latest share sale into account, the US bank has raised US$8.75 billion in five offerings of the shares since 2009.

"This is part of a long-term trend for Goldman Sachs to solve its capital restraints to meet new regulatory requirements, and I see the investment bank cutting its holding in ICBC to zero before 2014," said Sanford C. Bernstein analyst Michael Werner.

Since the global financial crisis, Goldman had been reducing its principal investments, partly by selling public shares, Werner said.

"Goldman's sale did create minor headwinds for ICBC. The stake sale doesn't always represent the peak of share prices, but the investment bank always finds an optimal time to cash out," he said. Yet he has an overweight rating on the stock, given the bank's solid capital position and liquid balance sheets.

ICBC fell 2.2 per cent to HK$5.82 yesterday, while the benchmark Hang Seng Index was little changed.

Excluding Goldman's US$1 billion sale, turnover in ICBC's shares yesterday increased to US$492 million from US$157 million the previous day.

The Chinese lender was the most actively traded stock on the Hong Kong stock exchange, where the local bourse saw the overall turnover reach US$9.8 billion.

ICBC's share price has risen 45 per cent from last year's low.