Singapore sovereign wealth fund Temasek has again taken up shares in the Industrial and Commercial Bank of China (ICBC) that Goldman Sachs wanted to unload.
Temasek's stake in the bank rose to 7.04 per cent from 6.71 per cent after it paid HK$1.54 billion for 280 million ICBC shares. Hong Kong stock exchange data showed that Temasek paid an average of HK$5.50 per share.
Goldman raised US$2.5 billion from the sale of ICBC H shares in April last year. Temasek bought most of them, some US$2.3 billion worth.
The sovereign wealth fund is keen to invest in mainland banks, and it has allocated more than half its portfolio to Asia.
Temasek president Gregory Curl said last year the Big Four mainland banks should have enough cash flow to handle a fall in return on equity from interest rate liberalisation.
Curl added that the fund was more comfortable investing in mainland banks than their US counterparts.
"There are less ambiguities about policies and regulatory changes in China than in the US," he said at a conference.
Mainland banks were "better run than most people would think", and their balance sheets more relevant to the country's real economic development, which made them more predictable, Curl said.
ICBC's stock fell 2.13 per cent to close at HK$5.52 yesterday, the first trading session after Goldman's divestment.
The US bank raised US$1.1 billion from the sale of 1.58 billion shares at a discount of 2.5 per cent to Monday's closing price, Bloomberg reported.
While ICBC had to disclose the purchase by Temasek because the fund owns more than 5 per cent of it, the other parties that bought shares may have fallen under that threshold.
The sale brought to an end the "strategic partnership" the two banks had established. New York-based Goldman bought a 4.9 per cent stake in ICBC for US$2.58 billion before the Chinese bank's initial public offering in 2006.
Before its IPO, ICBC was a technically insolvent state institution, reeling from bad loans.
ICBC's US$240 billion market value is now just below the combined value of JP Morgan Chase and Barclays.