Goldman Sachs Group, Inc. (GS) is selling 3.55 billion of its H-shares in Industrial & Commercial Bank of China Ltd. or ICBC to Singapore state-owned investment group Temasek Holdings Pte for $2.3 billion, reports said.
Temasek is said to be buying the shares at HK$5.05 per share, which represents a discount of 3.1 percent to their Friday closing price of HK$5.21. The transaction will take Temasek's deemed interest in ICBC to about 5.3 percent of H-shares.
The U.S. financial services firm in total is selling shares worth $2.5 billion in the Chinese lender, with the remaining shares being bought by institutional investors.
The purchase will enhance Temasek's exposure to China, the second-largest economy in the world. Last year, the firm upped its holding in China Construction Bank Corp. to slightly below 10 percent after a deal with Bank of America (BAC).
The Wall Street lender bought a stake in ICBC in 2006 by investing $2.58 billion for a 4.9 percent stake. Since then, it has made three share sales that together generated about $5.26 billion.
After this deal, Goldman will have $3 billion worth ICBC shares, which accounts for below 2 percent of the total share base. The firm reportedly does not want to sell all its shares in the Chinese company.
With stricter norms of capital requirement placed on lenders in the post-financial crisis era, European and U.S.-based financial institutions have been reducing stakes elsewhere to strengthen their capital positions.
Citigroup Inc. (C) sold its 2.71 percent equity stake in Shanghai Pudong Development Bank last month to institutional investors for an after-tax gain of about $349 million. In February, under pressure from banking regulators to bolster its capital reserves, the lender sold its remaining stake in India's Housing Development Finance Corp. Ltd. for an estimated $1.9 billion.
GS shares settled on Friday at $115.09, down $5.30 or 4.40 percent, on a volume of 6.38 million shares.
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