Singapore-based Temasek is planning to sell 5.2 billion of the shares it owns in Bank of China [Zhong Guo Yin Hang], the listed Beijing-based bank, to raise up to HKD 18.7bn (USD 2.4bn), the online Oriental Daily reported.
Citing an undisclosed market source, the report said Temasek is planning to sell the shares between HKD 3.6 and HKD 3.67 a share. Morgan Stanley is the arranger for the share sale, the report noted.
This is not the first time Temasek, the investment arm of the Singapore government, has sold off large chunks of BOC shares. Back in November 2007, Temasek shed a USD 567m stake in the wake of the US subprime mortgage crisis.
China Construction Bank: Temasek said to be selling 1.5bn shares to raise up to USD 1.2bn
Two shareholders of listed China Construction Bank (CCB) [Jian She Yin Hang] are planning to sell 1.5bn shares to raise up to HKD 9.3bn (USD 1.2bn), the online edition of Hong Kong Economic Journal reported. Citing a sale document that was in turn quoted by an unnamed newswire, the report said the shares would be sold between HKD 6.22 and HKD 6.35 apiece. The report, however, did not name the two shareholders.
A separate report in the online edition of Oriental Daily, which cited an undisclosed market source, said Singapore-based Temasek is planning to sell 1.5bn of CCB shares to raise HKD 9.3bn. The report noted that Morgan Stanley is the arranger for the share sale.
Woah did China Premier Wen Jia Bao just break up an affair with Singapore's first lady or something?! That is supposed to be funny, because Ho Ching, CEO of Temasek Holdings, is the wife of Lee Hsien Loong, who, in case you do not know or have not googled already, is the current Prime Minister of Singapore. Actually maybe it is not that funny, nevermind.
When I finished posting on Kyungeun Mutual Savings Bank yesterday I really had it in mind to spend today digging a little deeper into the company's operations, but then this chili crab just crawled out of nowhere, and so quickly, that I just had to comment on it. I first saw the rumour (as above) a little past midnight last night, and by the morning this deal was done!!!
This was surprising to me because for the past two years of my banking career I had not heard any rumours or tips suggesting that Temasek may be selling anything. I am not aware of them being in need for cash nor looking strongly to rebalance their portfolio, although to be fair I am not always particularly aware of very much.
The article linked to the word "done" above is already extremely comprehensive in coverage of the deal, so I will try not to regurgitate. If any of you are constrained for time I urge you to ignore everything below this and read that article instead.
1. Temasek website
Temasek manages a portfolio of SGD186bn (approx. USD155bn) with a staff of approx. 380 people. That's like an average of USD400mn per employee to manage - wow that is quite a statistic. Temasek also seems particularly proud of the fact that they CAGR'd (note: CAGR stands for Compound Annual Growth Rate, pronounce kay-gur) a total shareholder's return of 17% for the past 36 years, and so they should be proud I think - they are very quickly catching up to the track record of Warren Buffet's Berkshire Hathway!
Perhaps the BOC/CCB deal was financially driven then? Maybe they expect total returns from either investment to be significantly less than their proud 17%?...
They also have a bunch of information on their portfolio breakdown, investment strategies...blah. Of marginal interest is the fact that in 2009, 33% of their portfolio was invested in financial services. This increased to 37% in 2010. While they obviously do not publicly state any target sector weightings, the surge may have, in part, prompted them to rebalance.
Under their "Major Portfolio Companies" section they disclose all their major holdings - admirable! Not many investment funds seem to do that. CIC definitely doesn't. Here I note that they actually hold controlling/majority stakes in 2 banks - NIB Bank (Pakistan) and Bank Danamon (Indonesia). This makes Temasek different from CIC, which I found out 3 days ago that they only acquire minority stakes. Is it possible that they are selling down their minority holdings to look to take controlling stakes of smaller closely-held banks? Seems unlikely, but worth keeping in mind.
Final Commentary
Ok, lunch time is over, must get back to work. I am still a little shocked by the suddenness of the deal. I wonder what the Temasek guys are saying about Standard Chartered, which they also hold a minority stake in. Despite having left that bank now I still feel a certain fondness for it, sort of like the way you think about your first girlfriend from highschool. I hope she, I mean Standard Chartered, is doing ok.
Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Wednesday, July 6, 2011
Monday, July 4, 2011
Facebook: China Investment Corp. eyeing USD 1.2bn stake
China Investment Corp. (CIC), China’s sovereign wealth fund, is said to be investing USD 1.2bn to take a stake in Facebook, the privately owned California-based social network company, the Oriental Daily reported. The paper, citing undisclosed sources familiar with the situation who were in turn quoted by Business Insider, said CIC has appointed Citigroup to look at the possible investment. The paper added that apart from CIC, another Middle Eastern sovereign wealth fund is also interested in acquiring a stake in Facebook.
CIC, Facebook and Citigroup all declined to comment on the news, the report further said.
The Hong Kong Economic Times also carried a similar report. The paper said that based on the current estimated valuation of Facebook at USD 70bn, CIC is estimated to take a 1.7% stake in the social network company with its USD 1.2bn investment.
Seriously?? I don't have any great insight into the investment mandates and inclinations of CIC, but this deal seems a little bit ridiculous. Not least of which is the fact that Facebook cannot even be used in China.
So I decided to take a look at CIC to see what more I can find out. There should be no presumption that I will dig through boxes of filings and data - I simply started by checking out the CIC official website.
1. Corporate Profile
Always a good starting point to find out what exactly a company is. Relevant to this particular piece of news is the fact that i) CIC is wholly state-owned; ii) CIC does not seek controlling stakes nor operational influence in their investments; iii) CIC's investments are not limited to any sector, geography or asset class; iv) CIC is a commercial investment institution with full operational independency (i.e. supposedly, they act in autonomy from the Chinese government. But we don't really have to believe that do we?); v) registered capital of approx. USD200bn.
So far so good, because they haven't really told us anything useful at all yet. It seems like they can do whatever they want, and pretty much have as much money as they want to do it. The non-controlling stake part seems to be consistent with the rumour at least.
2. Press Releases
This will tell a little something about their recent investment activities. Nothing interesting as of recently, primary investments are in resource and energy companies. One instance of a wind energy company, oh and of course the infamous investment in Morgan Stanley. I do not see any tech investments in the past 3 years, which is as far back as their press releases date (CIC was set up in September 2007).
That said, it seems like the rumoured USD1.2bn figure is in the sweet spot of CIC. Most of their investments so far have been in the range of USD500m to USD2bn. However I can't shake off my suspicion that the rumour was crafted having known this fact. What I mean is the 1.7% stake is just a magic number, it's not like there were any other supporting rumours saying that Facebook was interested in raising approx. USD1bn, or a certain shareholder was interested in offloading a similar percentage stake.
3. Annual Report
Going through this is pretty grueling but sufficiently rewarding at the end of the day. I obviously have my BAU work to do so I just skimmed through this, but this is what I got out of it:
- Approx. 50% of the USD200bn of registered capital is allocated to global investment. For the mathematically-challenged, this means USD100bn.
- As at Dec 2009 global portfolio was approx. USD80bn. For the financially-indifferent this means CIC is sitting on shit tons of cash.
- Investment decisions are passed through 1 of 4 investment departments: Public Market, Tactical Investment, Private Market and Special Investments. I suppose Facebook would fall into Private Market or Special Investments. It's helpful to know that they have a department that will be able to take on the due diligence process but it really doesn't help very much in the analysis of the situation.
- As at Dec 2009, equity investments in North America accounted for approx. 44% of CIC's equity investment portfolio. Slight geographical bias?...
- I have no idea how to read their balance sheet, and there are no notes either. Why does it show over USD200bn of long term equity investments???
4. General Search & Other
This part is pretty much 90% Google and 10% industry knowledge. I happen to know that CIC released a regulatory filing to SEC in early 2010, but the whole US portfolio of CIC is too small to project any sort of investment strategy that they may be applying. The only interesting bit is that they hold 30,000 shares of Apple, but that is way too insignificant a stake to jump to any conclusions.
Final Commentary
I still think this rumour is bullshit.
CIC, Facebook and Citigroup all declined to comment on the news, the report further said.
The Hong Kong Economic Times also carried a similar report. The paper said that based on the current estimated valuation of Facebook at USD 70bn, CIC is estimated to take a 1.7% stake in the social network company with its USD 1.2bn investment.
Seriously?? I don't have any great insight into the investment mandates and inclinations of CIC, but this deal seems a little bit ridiculous. Not least of which is the fact that Facebook cannot even be used in China.
So I decided to take a look at CIC to see what more I can find out. There should be no presumption that I will dig through boxes of filings and data - I simply started by checking out the CIC official website.
1. Corporate Profile
Always a good starting point to find out what exactly a company is. Relevant to this particular piece of news is the fact that i) CIC is wholly state-owned; ii) CIC does not seek controlling stakes nor operational influence in their investments; iii) CIC's investments are not limited to any sector, geography or asset class; iv) CIC is a commercial investment institution with full operational independency (i.e. supposedly, they act in autonomy from the Chinese government. But we don't really have to believe that do we?); v) registered capital of approx. USD200bn.
So far so good, because they haven't really told us anything useful at all yet. It seems like they can do whatever they want, and pretty much have as much money as they want to do it. The non-controlling stake part seems to be consistent with the rumour at least.
2. Press Releases
This will tell a little something about their recent investment activities. Nothing interesting as of recently, primary investments are in resource and energy companies. One instance of a wind energy company, oh and of course the infamous investment in Morgan Stanley. I do not see any tech investments in the past 3 years, which is as far back as their press releases date (CIC was set up in September 2007).
That said, it seems like the rumoured USD1.2bn figure is in the sweet spot of CIC. Most of their investments so far have been in the range of USD500m to USD2bn. However I can't shake off my suspicion that the rumour was crafted having known this fact. What I mean is the 1.7% stake is just a magic number, it's not like there were any other supporting rumours saying that Facebook was interested in raising approx. USD1bn, or a certain shareholder was interested in offloading a similar percentage stake.
3. Annual Report
Going through this is pretty grueling but sufficiently rewarding at the end of the day. I obviously have my BAU work to do so I just skimmed through this, but this is what I got out of it:
- Approx. 50% of the USD200bn of registered capital is allocated to global investment. For the mathematically-challenged, this means USD100bn.
- As at Dec 2009 global portfolio was approx. USD80bn. For the financially-indifferent this means CIC is sitting on shit tons of cash.
- Investment decisions are passed through 1 of 4 investment departments: Public Market, Tactical Investment, Private Market and Special Investments. I suppose Facebook would fall into Private Market or Special Investments. It's helpful to know that they have a department that will be able to take on the due diligence process but it really doesn't help very much in the analysis of the situation.
- As at Dec 2009, equity investments in North America accounted for approx. 44% of CIC's equity investment portfolio. Slight geographical bias?...
- I have no idea how to read their balance sheet, and there are no notes either. Why does it show over USD200bn of long term equity investments???
4. General Search & Other
This part is pretty much 90% Google and 10% industry knowledge. I happen to know that CIC released a regulatory filing to SEC in early 2010, but the whole US portfolio of CIC is too small to project any sort of investment strategy that they may be applying. The only interesting bit is that they hold 30,000 shares of Apple, but that is way too insignificant a stake to jump to any conclusions.
Final Commentary
I still think this rumour is bullshit.
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