12th May 2015 11:00
LONDON (Alliance News) - Hang Seng Bank Ltd, a 62.14% subsidiary of London-listed HSBC Holdings PLC, is selling up to 4.99% of Chinese lender Industrial Bank Co Ltd, the companies said in a joint-statement on Tuesday.
Hang Seng is reducing its stake in Industrial Bank by selling up to 950.7 million shares to institutional investors through a placing agreement with Goldman Sachs Gao Hua Securities Co Ltd and UBS Securities Co Ltd. Hang Seng's stake in Industrial Bank will be cut to 0.88% if the maximum is sold in the placing.
The shares will be sold at CNY17.68 per share and will raise up to CNY16.81 billion before expenses for Hang Seng. The purchase price is equivalent to a 5.96% discount to the closing price of Industrial Bank's shares on the Shanghai Stock Exchange on Tuesday.
Hang Seng sold a 5.00% stake in Industrial Bank on February 10 for CNY12.73 billion.
HSBC and its subsidiary said the latest sale was an "opportunity to realise" part of the investment in Industrial Bank.
Hang Seng will use the proceeds of the sale "principally to support future business expansion and for other purposes".
Hang Seng first acquired shares in Industrial Bank for CNY1.7 billion in 2004, when it held a 15.98% stake in the bank before being diluted on Industrial Bank's listing in Shanghai. The subsidiary then spent CNY2.3 billion on shares in a 2010 rights issue, before being diluted again in early 2013 due to a private placement by Industrial Bank.
The shares being sold were given a fair value of HKD19.62 billion at the end of 2014. Hang Seng estimates a net gain on the sale of the shares of HKD7.6 billion. CNY1 equals about HKD1.25.
HSBC shares were down 2.3% at 617.50 pence midday Tuesday.
By Samuel Agini; [email protected]; @samuelagini
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