HONG KONG (Thomson Financial) - Industrial & Commercial Bank of China
(ICBC), the mainland's largest lender, said it has agreed to buy a 20 percent
stake in South Africa's Standard Bank Group for 42.31 billion Hong Kong dollars.
The deal is among the biggest overseas acquisitions made by a Chinese
company.
ICBC will acquire shares from existing shareholders as well as subscribe to
new shares to obtain a 20 percent holding in the enlarged share capital of South
Africa's largest banking group.
Standard Bank Group has agreed to pay ICBC an amount equal to 1 percent of
the total transaction cost if it decides to back out of the deal.
The acquisition is expected to be completed by Feb 26, 2008.
The transaction is subject to approval from various state agencies in South
Africa and China as well as from the UK Financial Services Authority.
ICBC did not say how it intends to finance the deal but the bank is sitting
on a cash pile of 930 billion yuan.
This is the Chinese bank's third overseas acquisition. In December 2006, it
bought a 90 percent stake in PT Bank Halim Indonesia and in August this year,
ICBC agreed to pay 583 million dollars for 80 percent of Macau's Seng Heng Bank.
The Standard Bank Group is the largest banking group in South Africa with
total assets of 1,255.1 billion Hong Kong dollars as of end-June and market
capitalization of 166.9 billion dollars as of 22 October. The South African
government investment vehicle Public Investment Corp is the largest shareholder
in the bank with a 13.9 percent holding.
It has more than 950 branches, operations in 38 countries and employs over
46,000 people.
As of end-2006 ICBC had 98 overseas branches including operations in Tokyo,
Seoul, Singapore, Frankfurt and Luxemburg.
The deal will help ICBC expand its network in emerging markets at a time
when the mainland government is encouraging companies to invest in developing
countries.
The company said it has been actively looking for opportunities to
capitalize on the trade and investment flows between China and African
countries.
Chinese companies like PetroChina have been investing heavily in
resource-rich African nations.
China was Africa's third largest trade partner in 2006.
ICBC will participate in the management of the South African bank by
nominating two non-executive directors to its board, with one of them as the
vice chairman of Standard Bank Group.
The Chinese bank said it will support Standard Bank's strategy to expand its
African and international networks including China.
A strategic cooperation committee will be formed with an equal number of
representatives from both banks who will meet at least quarterly, said ICBC.
This committee will be responsible for specific strategic initiatives and
associated business plans.
The cooperation agreement between the two banks will also entail them a
preferred partner status where each bank will be allowed to access the other's
network and services.
The two banks are looking to jointly set up a global mining resources fund
with an initial fund size of 1 billion US dollars, which will invest in natural
resource assets including mining, metals, oil and gas and their associated
industries.
Shares in ICBC fell 2 cents or 0.3 percent to 7.01 Hong Kong dollars as
investors took profit on its sharp gains earlier this week.
The mainland bank said profits in the first nine months grew 66 percent from
a year earlier, buoyed by robust lending growth and increased fee income.
ICBC's net profit for the period stood at 63.5 billion yuan, up from the
previous year's 38.19 billion under international accounting standards.
(1 US dollar = 7.80 Hong Kong dollars, 7.50 yuan)
parvathy.ullatil@thomson.com
pu/zr
COPYRIGHT
Copyright Thomson Financial News Limited 2007. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content,
including by framing or similar means, is expressly prohibited without the prior
written consent of Thomson Financial News.
|