Temasek to buy 5% of Bank of China

The investment arm of the Government of Singapore has agreed to acquire 5% of China’s second-largest bank through the latter’s upcoming IPO, according to a report.

Bank of China, China’s second-largest banking group, has prepared all relevant documents and is planning to apply to the Hong Kong Stock Exchange for an initial public offering early this year.

According to a report by news agency SinoCast, the bank’s application includes an agreement to sell five percent of the shares at the offer price to Temasek Holdings, an investment arm of the Government of Singapore.

The price of the share sale has not been disclosed, but when a consortium led by The Royal Bank of Scotland completed the acquisition of a ten percent stake in Bank of China earlier this week, it was reported to have paid $3.1 billion (€2.6 billion).

It would not be the first incursion into the Chinese banking sector for Temasek, which already holds stakes of 5.9 percent in China Construction Bank (China’s third-largest lender) and 4.5 percent in Minsheng Banking Corp, the country’s first privately owned lender.

The Chinese banking industry is currently seeing a blitz of activity as banks open themselves up to new shareholders. Last October, China Construction Bank raised $9.3 billion from its flotation, while BoCom, the fifth-largest lender, launched a Hong Kong IPO last June.

Meanwhile, International Commercial Bank of China (ICBC) has announced plans to list by the end of this year and has agreed a non-binding commitment to sell ten percent of its shares to a consortium including Goldman Sachs Capital Partners for more than $3 billion.

At the beginning of this week, the Wall Street Journal reported that a consortium led by Citigroup had submitted a bid of around $3 billion for an 85 percent stake in Guangdong Development Bank. Washington DC-based private equity firm Carlyle Group is reported to be part of the consortium.