Goldman Sachs is seeking to reduce its exposure to China’s controversial banking sector by selling more of its shares in Industrial and Commercial Bank of China.
The investment bank was offering $1bn worth of ICBC stock for HK$5.77 (74 cents) per share, a person familiar with the deal confirmed. That represents a 3 per cent discount to ICBC’s closing price in Hong Kong yesterday of HK$5.95. It is the fifth time that Goldman has unloaded part of its ICBC stake in recent years.
Goldman bought the ICBC stake for $2.6bn in early 2006 as part of an effort to tap into China’s fast-growing banking industry. Purchasing shares of Chinese banks has proven to be an easier way for non-Chinese investment banks to gain entry into the local market. But Goldman’s ICBC shares have been volatile, leading to large mark-to-market swings in the valuation of the stake on Goldman’s balance sheet. The stake boosted Goldman’s earnings by $334m in the last three months of 2012, for example, following a 20 per cent rise in the value of ICBC’s shares in the period.