Banking & Finance

CICC’s shares drop as China Mobile to sell its 2.5pc stake in the Chinese lender

China Mobile’s stake sale, which will raise US$48 million, viewed as normal divestment, according to analyst

PUBLISHED : Wednesday, 13 July, 2016, 11:50am
UPDATED : Wednesday, 13 July, 2016, 11:50am

The Hong Kong share price of mainland investment bank China International Capital Corporation (CICC) tumbled on Wednesday, amid reports that China Mobile is to sell its shareholding in the lender.

China Mobile, the world’s largest mobile operator by subscribers, is selling 37.7 million shares, representing a 2.48 per cent stake in CICC, raising US$59 million through the disposal. The indicative marketing price band is set between HK$11.85 and HK$12.09 per share, IFR reported on Tuesday, citing a deal term sheet.

The price band represents a discount of up to 4.13 per cent on CICC’s closing price on Tuesday. Goldman Sachs is the sole bookrunner, according to the document, IFR reported.

A spokesperson from CICC declined to comment on the report on Wednesday morning.

In Hong Kong trading, CICC’s shares lost 2.91 per cent to HK$12 at 10.25am.

Frank Xu, an analyst with Q Fund Management Hong Kong, said it appeared to be a normal cash out by China Mobile, and may not have any negative implications to the market.

“US$59 million is a small number to cash-rich companies like China Mobile,” he said.

“It is very likely that China Mobile, as a strong state-owned enterprise, extended support to CICC’s initial public offering last year, while now they thought it was good timing to cash out,” he added.

CICC is one of China’s oldest investment banks, known for its expertise in handling international services for Chinese clients, and its strong political network.

Last week, the company announced it was in merger talks with privately-held China Investment Securities, a move interpreted by analysts as readying for a mainland listing.

Shenzhen-based China Investment is fully owned by Central Huijin Investment, a unit of the country’s sovereign wealth fund. Huijin also owns 28.4 per cent of CICC.

CICC listed in Hong Kong in November, raising US$811 million by pricing its shares at HK$10.28.