12 May 2009
May 12 (Bloomberg) -- Bank of America Corp., under pressure from U.S. regulators to raise money, sold a 5.8 percent stake in China Construction Bank Corp. for about $7.3 billion, said two people with knowledge of the matter.Investors led by Hopu Investment Management Co. and Temasek Holdings Pte bought 13.5 billion shares sold by Bank of America, the people said, declining to be identified because they aren't authorized to discuss the deal publicly. The shares were sold at HK$4.20 apiece, 14 percent below yesterday's closing price, one of the people said. Bank of America spokesman Robert Stickler declined to comment.
The sale brings Bank of America Chief Executive Officer Kenneth Lewis closer to the $33.9 billion regulators say he needs to raise following stress tests of U.S. banks. The Charlotte, North Carolina-based company and foreign firms including UBS AG and Royal Bank of Scotland Group Plc have sold shares in Chinese lenders that they bought almost four years ago, after credit- market losses depleted their finances.
"The stake sale is just a small step toward raising the recommended amount of capital," said Christian Jin, a fund manager at HI Asset Management Co. in Seoul, which oversees the equivalent of $8 billion. "Bank of America still has a long way to go to meet that target."
The stake sold by Bank of America represents 6 percent of Construction Bank's outstanding Hong Kong stock. A lock-up on the stake expired May 7. The U.S. bank owns another 25.6 billion shares that can't be sold before Aug. 29, 2011.
Temasek's Bank Deals
Construction Bank, the nation's second-biggest lender, fell 1.8 percent to HK$4.81 in Hong Kong trading at 12:30 p.m. local time. The stock has gained 13 percent this year. Construction Bank's Beijing-based spokesman Yu Baoyue said he wasn't aware of the sale. A Temasek spokeswoman, who declined to be identified, said she had no comment.
Hopu, founded by Goldman Sachs Group Inc.'s China partner Fang Fenglei in 2007, bought about 30 percent of a $2.3 billion Bank of China Ltd. stake sold by Royal Bank of Scotland in January, two people familiar with the deal said at the time. The fund raised $2.5 billion from overseas investors including Goldman and Temasek last year.
Temasek, Singapore's state-owned investment firm, owned 5.65 percent of Construction Bank before the deal and is one of the largest shareholders in Standard Chartered Plc and DBS Group Holdings Ltd. It also owns stakes in India's ICICI Bank Ltd. and lenders in Indonesia, South Korea and Pakistan.
The Singaporean company earlier turned down an offer to buy Construction Bank stock from Bank of America, though changed its mind after the price was lowered, one of the people said.
Temasek invested about $5.9 billion in Merrill Lynch & Co., before it was acquired by Bank of America. The Singapore investment firm holds about 189 million shares in Bank of America after converting its Merrill stock. Along with China Development Bank Corp., Temasek paid 3.6 billion euros in 2007 for a 5.2 percent stake in Barclays Plc and added another 4.5 billion pounds in June.
