DealBook: Goldman Sachs to Exit Chinese Bank With $1.1 Billion Stake Sale

ReutersA branch of Industrial and Commercial Bank of China in Huaibei.

Goldman Sachs plans to raise about $1.1 billion by selling its remaining stake in the Industrial and Commercial Bank of China, ending its lucrative seven-year investment it what has grown to become the world’s biggest lender by market value.

The Wall Street bank is selling its shares in I.C.B.C. at a price range of 5.47 Hong Kong dollars to 5.50 Hong Kong dollars each, raising total proceeds of about $1.1 billion, a person with direct knowledge of the transaction said Monday.

The sale ‘‘takes out the entire remaining stake,’’ the person said, who spoke on condition of anonymity because the information on the planned sale is not yet public.

Goldman has been reducing its stake in the Chinese lender over the last year, including a deal in April 2012 involving shares worth $2.5 billion at the time. Most of those shares were sold to Temasek Holdings, the Singaporean sovereign investment firm.

The sale comes as China’s banks have been confronting slowing profit growth, as the nation’s economy has become less reliant on traditional bank lending. Net profit at I.C.B.C. rose 14.5 percent last year from 2011, its slowest growth in five years.

Chinese companies are increasingly able to tap alternate sources of financing, including offshore bond markets, while local governments have turned to off-balance-sheet financing that is tied to the nation’s huge but more loosely regulated market for alternative investment products.

Goldman first bought into I.C.B.C. in 2006, before the Chinese lender’s initial public offering in Hong Kong, paying $2.6 billion for a stake of around 5 percent.

At the high end of 5.50 Hong Kong dollars a share, the sale price on the remaining stake represents a slight discount to the stock’s closing price of 5.56 Hong Kong dollars on Thursday.

The shares rose 1.44 percent on Monday on news of the pending sale. Shares in I.C.B.C. have risen 2.6 percent so far this year, compared with a 2.1 percent decrease in the main index that tracks mainland China companies listed in Hong Kong.

Article source: http://dealbook.nytimes.com/2013/05/20/goldman-sachs-to-exit-chinese-bank-with-1-1-billion-stake-sale/?partner=rss&emc=rss