China Assets (Holdings) is paying a 27.6 per cent premium for its $74.7 million purchase of First Shanghai Investments' shares in a foreclosure-sale transaction involving First Shanghai's key shareholder, International Enterprises Investment (IEI). The 202 million First Shanghai shares, originally pledged by IEI to the Hong Kong Chinese Bank as security for loan facilities gained, were sold at 37 cents a share compared with the stock's last-traded close of 29 cents prior to its suspension. The Hong Kong Chinese Bank was selling the shares under its power of sale on foreclosure, the firms said. IEI is also an ultimate controlling shareholder of China Assets. IEI is an equal joint venture between Shenyin & Wanguo Securities and the now-defunct China Venturetech Investment Corp (CVIC), a well-connected but debt-laden trust and investment firm shut down by Beijing in June. Following the foreclosure sale and a conditional agreement, IEI's First Shanghai stake would fall to 20.7 per cent, from 40.4 per cent. China Assets would raise its First Shanghai stake to 20.1 per cent from 0.4 per cent. China Assets is 26.5 per cent owned by First Shanghai. Despite the apparently high premium for the share purchases, China Assets director Frank Tsui Che-yin said the transaction represented a unique opportunity for the company to invest in a firm which the directors believed would provide good investment returns. 'It would not be possible for such numbers of shares to be acquired through the market and so the premium appears reasonable,' he said. First Shanghai earned $16.89 million last year, against a net loss of $13.87 million in 1996, boosted by a $20.6 million write-back in provisions. Separately, First Shanghai said it had received nothing from CVIC or others regarding the liquidation of CVIC. A further announcement would be made by the firm.