INVESTMENT bank Goldman Sachs Group yesterday set out plans to sell its remaining stake in giant lender the Industrial and Commercial Bank of China (ICBC).
Its stake comes in at around $1.1bn (£722m) and represents the third tranche sold in just over a year.
Prior to its 2006 initial public offering, ICBC was a technically insolvent state institution, reeling from the bad loans that had saddled China’s financial industry.
But after listing on the Hong Kong exchange the bank grew along with China’s economic boom.
It is now the biggest lender in the world by market capitalisation – its $240bn market value is just shy of the total worth of JP Morgan and Barclays put together.
Goldman offered the ICBC shares in a range of HK$5.47 to HK$5.50, equivalent to a discount of up to three per cent to yesterday’s close of HK$5.64, according to a term sheet.
Goldman agreed to invest $2.58bn in ICBC in January 2006, using internal funds that invest a mix of client, employee and corporate cash. The bank has sold down that stake through six deals since 2009. If Goldman is able to sell its final stake for $1.1bn, total gross proceeds from the sales would come in at $10.1bn.
However calculating Goldman’s own profit precisely on the stake is tricky because not all of the investment came from its own balance sheet, and the cost of acquiring and maintaining the ICBC stake is unknown.
Since 2006, Goldman has reported $3.5bn in net revenue related to ICBC in quarterly filings.
Goldman’s shares increased 0.93 per cent on the day.