Hang Seng Bank Limited has announced that the bank had entered into a placing agreement with Goldman Sachs Gao Hua Securities Company Ltd. to sell its 5 per.cent of ordinary shares of Industrial Bank Co. Ltd. to institutional investors. In a filing with the Hong Kong Stock Exchange dated February 10, the bank said the transaction would involve a transfer of up to 952.6 million ordinary shares of Industrial Bank. ‘The shares will be sold to the places for a purchase price of RMB13.36 per share (approximately HK$16.58 per share) in cash,’ the filing reads. The transaction will raise a maximum of around HK$15.79 billion for Hang Seng. According to the filing, the bank ‘considers that the transaction represents an opportunity to realise part of its investment in Industrial Bank, taking into account the current market conditions in the A share market and the bank’s long-term strategic objectives, and to strengthen the bank’s regulatory capital position and ability to meet future regulatory requirements,’ the filing reads. Proceeds of the net sale of the transaction will go towards the support of future business expansion and ‘for other purposes as deemed appropriate by the board [of directors of the bank]’, according to the filing. The bank initially acquired shares in Industrial Bank for 1.7 billion yuan (approximately HK$1.6 billion) in 2004 and at that time Hang Seng held a 15.98 per cent stake in Industrial Bank’s enlarged capital, which was then diluted upon Industrial Bank’s listing on SSE. Hang Seng subsequently acquired further shares in Industrial Bank for 2.3 billion yuan (approximately HK$2.6 billion) in 2010 by subscribing to its rights issue. The bank’s holding was diluted as a result of a private placement by Industrial Bank in early 2013. ‘Immediately prior to entering into the placing agreement, the bank held approximately 10.87 per cent of the ordinary shares of Industrial Bank,’ the filing said, adding that the total gross cash dividends received from Industrial Bank since Hang Seng’s investment amount to HK$4.4 billion.
—
