Despite its unusual structure, the deal should have gone smoothly, and the market should have been grateful.
Beijing-based Hopu Investment Management - the US$2.5 billion fund run by Fang Fenglei, a leading mainland investment banker - struck an unusual deal with Bank of America Corp on May 12. A Hopu-led buying consortium took over US$7.3 billion worth of China Construction Bank Corp shares in one go.
There are good reasons why Hopu made an offer to the United States bank, which found the deal difficult to refuse even though the sale price of HK$4.20 a share represented a discount of 14.29 per cent to CCB's closing price on Monday.
With the whole lot changing hands in one go, the arrangement avoided the usually messy share placement on a deal of this scale. Often shares are sold to dozens of funds, and some of them cannot wait to dump them to make a quick profit.
In Hopu's buying consortium were Singapore's Temasek Holdings and China Life Insurance, both of which are more likely to be long-term investors.
For Hopu and Bank of America, the extra bonus was that this arrangement would also calm the nerves of Beijing officials at a time when international financial institutions have been lining up to shed shares in mainland banks during the financial crisis.
The market should also be grateful because the deal removed an overhang on CCB's stock. Indeed on May 12, the day the sale was announced, CCB shares rose 1.63 per cent to HK$4.98.