BOC stake purchase seen as good bet for Hopu Investment

The purchase of Bank of China's stake from Royal Bank of Scotland Group will prove to be a sure-fire bet for mainland investment guru Fang Fenglei's private-equity fund, sources and analysts said.

Hopu Investment Management shelled out almost US$700 million to take 30 per cent of a stake sold by RBS in Hong Kong this week.

This was Mr Fang's second deal after the fund was founded in 2007, according to Bloomberg and sources. Mr Fang was a former chairman of Goldman Sachs' mainland securities venture.

'It is certain that Mr Fang's fund did buy the stake, but there are still uncertainties that revolve around the purchase,' said one banking source who was briefed on the situation. 'Since Mr Fang is quite close to some senior government officials, it can't be ruled out that he sealed the deal under Beijing's directives.'

RBS cashed out from its 4.3 per cent stake in BOC to raise HK$18.48 billion, offering the 10.8 billion shares at HK$1.71 each to institutional investors early this week.

Hopu and some other investors bought the BOC stake at a time when western financial institutions including UBS and Bank of America Corp were dumping shares of Chinese lenders to boost their cash flow.

RBS bought the shares in 2005 at HK$1.14 each before the Chinese bank's initial public offering.