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Goldman Sachs Sells $1B Stake in Industrial & Commercial Bank of China

ICBC has gained more than 8 percent so far this year and about 15 percent since Goldman Sachs sold a $2.5 billion stake in April

Goldman Sachs Group Inc. (GS) is seeking to sell a $1 billion stake in Industrial & Commercial Bank of China Ltd. after the world’s biggest lender by market value rebounded almost 50 percent from last year’s low.

The shares are being offered at HK$5.77 each, 3 percent lower than the Chinese lender’s HK$5.95 (1398) closing price in Hong Kong today, according to a term sheet obtained by Bloomberg News. The document doesn’t indicate the specific number of shares offered.

Zhang Xin, chief executive officer of property developer Soho China Ltd., talks about China's economy and real estate market. She speaks with Tom Keene on Bloomberg Television's "Surveillance" on the sidelines of the World Economic Forum in Davos, Switzerland.

Investing in local lenders in China is reaping bigger profits for foreign banks than operating their own franchises in the world’s second-largest banking market. The Western firms’ gains on those stakes are set to exceed their investments with more than $20 billion in holdings remaining even after they recouped about $24 billion.

The Wall Street firm is selling down an investment first made in January 2006 when New York-based Goldman Sachs and client funds it manages agreed to invest $2.58 billion in Beijing-based ICBC. The bank and the funds have offloaded ICBC shares at least four times prior to today’s effort, data compiled by Bloomberg show.

ICBC has gained more than 8 percent so far this year and about 15 percent since Goldman Sachs’s private equity funds sold a $2.5 billion stake in April to Singapore’s Temasek Holdings Pte. The bank and its funds have divested at least $7.76 billion worth of ICBC shares in four sales since June 2009, data compiled by Bloomberg show.

BNP Paribas

Connie Ling, a Hong Kong-based spokeswoman for Goldman Sachs, declined to comment on the stake sale.

Global banks and financial institutions including Temasek, Bank of America Corp. and Citigroup Inc. invested a combined $33 billion in Chinese banks from 2001 to 2009, according to data compiled by the China Banking Regulatory Commission.

Their profits from selling down those stakes overshadow the $10 billion that global banks have jointly earned over the past decade from their own franchises in China, the regulator’s data show.

BNP Paribas SA, France’s largest bank, is among the latest global financial firms to boost investments in China as the local lenders’ profits defy the global economic slowdown and rise to a record. The Paris-based bank said last month it plans to bolster its stake in Bank of Nanjing Co. to as much as 20 percent from about 15 percent.

 

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