HONG KONG/SINGAPORE - Temasek bought US$2.3 billion (S$3 billion) worth of Industrial and Commercial Bank of China's (ICBC) Hong Kong-listed shares from seller Goldman Sachs, piling into three of China's top four banks and raising its bet on the world's second-biggest economy.
The deal for ICBC takes Temasek deeper into China's banking industry, which has grown from insolvency six years ago to become a sector that holds four of the world's top 10 banks by market value.
Mr Ding Wei, Temasek's China head, told Reuters that it bought into ICBC because the price was reasonable and the investor was positive about the bank and China's long-term development.
Temasek already owns stakes in China Construction Bank and Bank of China.
China assets accounted for 20 per cent of its portfolio as of March last year.
Mr Song Seng Wun, an economist at CIMB, said: "Temasek has laid out its strategy before on where it thinks growth is. Within Asia, China anchors the growth, so Temasek is putting money where its mouth is."
The latest purchase was of 3.55 billion H-shares, or about 1 per cent of ICBC, the world's largest bank by market value.
Temasek now has a 1.3 per cent stake in ICBC, a Temasek spokesman said. This includes ICBC shares that the investor owns directly, as well as various other stakes held by Temasek-linked companies.
China's banking industry has come under fire lately, as customers and politicians have cried out that the sector's massive profits are coming at the expense of citizens.
Low deposit rates, coupled with steady customer fees, are at the heart of the protests.
Goldman's block trade is in line with its plan to reduce its stake in ICBC, which it bought before the Chinese bank's 2006 initial public offering (IPO).
After the sale - its fourth - Goldman has roughly US$3 billion worth of ICBC shares remaining.
Goldman sold the Hong Kong-traded shares of ICBC at HK$5.05 each (S$0.82), or a 3.1 per cent discount to last Friday's closing price.
The other roughly US$200 million worth of shares were sold to other institutional investors, a source said.
Hong Kong shares of ICBC, which has a market value of US$240 billion, fell as much as 1.7 per cent early yesterday but pruned the losses to be down 0.8 per cent in the afternoon, in line with the broader market.