A?fund run by Goldman Sachs Group Inc's China partner Fang Fenglei bought about 30 percent of a US$2.3-billion Bank of China stake sold by Royal Bank of Scotland Plc this week, two people familiar with the deal said.
Hopu Investment Management Co, founded by Fang in 2007, made the investment together with unidentified associates, the people said, declining to be identified because details are private. Edinburgh-based RBS sold 10.8 billion shares in BOC for HK$1.71 (22 US cents) apiece to institutional investors.
It was the private equity fund's second investment since Fang, 56, raised US$2.5 billion from overseas investors including Goldman and Temasek Holdings Pte last year.
Hopu started studying opportunities to invest in Chinese lenders including the Industrial and Commercial Bank of China six months ago, as stock declines made valuations attractive, the people said.
''The entry point provides a relatively liquid and an opportunistic investment for a Chinese private equity investor which has just closed a mega fund with limited legacy portfolio,'' said Vincent Chan, chief executive officer of Spring Capital Asia Ltd.
''One argument for private equity to invest in public companies is that shares of the latter have fallen faster than the closely held ones,'' he said.
RBS, UBS AG and the Bank of America have been selling stakes in Chinese lenders they bought in 2005 to help repair balance sheets damaged by credit market writedowns. BoA sold US$2.8 billion of shares in China Construction Bank last week, and Zurich-based UBS sold about US$900 million of BOC stock on December 31, Bloomberg News said.
BOC advanced 2.6 percent to HK$1.95 yesterday in Hong Kong. The shares trade at about book value after dropping 44 percent in the past year, according to data compiled by Bloomberg. The acquisition price marks 0.85 times the company's book value in September 2008.
(Shanghai Daily January 16, 2009)
