Hang Seng to Sell Stake in Industrial Bank for $2.7 Billion

Updated on

Hang Seng Bank Ltd., the Hong Kong lender controlled by HSBC Holdings Plc, will sell a second stake in China’s Industrial Bank Co. for as much as $2.7 billion as it tries to boost capital.

The company is offering almost 5 percent of Industrial Bank to money managers, cutting its holding to less than 0.9 percent, HSBC said in a statement Tuesday.

Hang Seng Bank joins global banks including Bank of America Corp. and Goldman Sachs Group Inc., which have raised at least $14 billion divesting shares in Chinese financial institutions since the start of 2012. The lender sold a 5 percent stake in Industrial Bank in February for about $2 billion as regulators made it more expensive for banks to hold minority investments.

The proceeds from the sale will be used to “support future business expansion” and the lender will “regularly review its remaining shareholding” in Industrial Bank, Hang Seng Bank said in the statement.

Goldman Sachs Gao Hua Securities Co. and UBS Securities Ltd. are managing the offering of about 950.7 million shares. The Industrial Bank shares are on sale for 17.68 yuan ($2.8) each, 6 percent less than Tuesday’s closing price of 18.80 yuan.

Industrial Bank has climbed 71 percent in the past six months, in line with a 76 percent gain in the Shanghai Composite index. HSBC fell 2.4 percent to 617.30 pence as of 12:52 p.m. in London on Tuesday, paring its gain this year to about 1.8 percent.

Regulatory Requirements

Hang Seng bought 16 percent of Industrial Bank in December 2003 for HK$1.62 billion ($209 million). In January 2013, it reclassified its shares in the bank as a financial investment, reaping a one-time HK$9.5 billion accounting gain.

Hang Seng Bank said it will review its remaining stake, taking into account its “planned future business growth, regulatory requirements, market conditions and delivery of sustainable long-term value to shareholders,” HSBC said. The London-based lender owns about 62 percent of Hang Seng Bank.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE