Temasek plans to raise stake in Citic unit

Temasek Holdings, the investment arm of the Singapore government, plans to increase its stake in Citic Resources Holdings to strengthen its position as the second-biggest shareholder of the mainland oil and coal firm, sources said.

Temasek will buy a quarter of the 200 million shares offered by Citic Resources' third-largest shareholder, United Star International, sources close to the deal said.

The share sale represents 42 per cent of the 9.4 per cent stake that United Star holds in Citic Resources.

The shares were being marketed at between HK$5.64 and HK$5.88 each for up to HK$1.176 billion, a zero to 4 per cent discount on Citic Resources' closing price on Tuesday, according to a term sheet sent to fund managers.

United Star has agreed not to reduce its holdings in Citic Resources in the three months after the share transaction is completed, the term sheet showed.

'The offering received strong support from both hedge and traditional fund houses, where it was believed that one-fourth of the offering had been purchased by Temasek,' said a source close to the offering.

UBS is the sole bookrunner of the offering.

Shares of Citic Resources hit a fresh high of HK$6 over the past week.

Temasek Holdings owns an 11.28 per cent stake in Citic Resources, second only to Citic Group with 55 per cent.

Temasek increased its Citic Resources stake from 7 per cent last month by acquiring HK$450 million worth of new shares. It first acquired a 5 per cent stake in Citic Resources in February.

Citic Resources raised US$1 billion by issuing seven-year bonds to build a war chest for acquisitions.

It recently paid A$112.9 million to raise its stake in struggling Australia-listed Macarthur Coal, increasing its non-oil holdings before a potential spin-off of these assets.

Citic Resources chairman Peter Kwok Viem had suggested that the company was mulling a separate listing for its non-oil assets, after it acquired from its parent a 47.3 per cent stake in Kazakhstan oil firm Karazhanbasmunai and related assets for US$1 billion.