HONG KONG - The Li Ka Shing Foundation is selling two billion shares in mainland lender Bank of China Ltd. in a placement that could raise up to US$524 million for the charitable foundation owned by Hong Kong's richest man, according to a term sheet seen by Dow Jones Newswires and a person familiar with the situation.
The two billion Hong Kong-listed H shares are being placed to investors at HK$ 1.98-HK$2.03 each, a discount of between 5% and 7.5% to their Wednesday closing price of HK$2.14, according to the term sheet.
Li Ka-shing's foundation bought the shares during the 2006 initial public offering of Bank of China as part of a syndicate that was led by Royal Bank of Scotland Group PLC (RBS) and included Merrill Lynch & Co. (MER), which is the sole bookrunner of Wednesday's placement.
The syndicate invested a total of US$3.1 billion for a 10% stake in Bank of China, China's second-largest lender by assets after Industrial & Commercial Bank of China Ltd., ahead of the bank's Hong Kong listing in June 2006.
Bank of China's shares were priced at HK$2.95 each during its US$11.2 billion IPO, which at the time was the biggest listing on record by a Chinese company. It wasn't immediately clear how much the foundation paid for its stake.
Li Ka Shing Foundation Still Holds Stake
The Bank of China shares sold Wednesday amount to around 30%-40% of shares held by Li through the foundation, the person familiar with the situation said.
The foundation's remaining Bank of China shares are subject to a lockup period of 90 days, according to the term sheet.
Wednesday's placement comes a week after UBS AG (UBS)sold its entire 1.33% stake in Bank of China. People familiar with the situation said the deal raised US$808 million for the Swiss bank.
Earlier Wednesday, Bank of America Corp. (BAC) confirmed it had raised US$2.8 billion by cutting its stake in China Construction Bank Corp. (0939.HK) to 16.6% from 19.1%.
Western banks, grappling with the credit crunch and the need to raise funds, are increasingly expected by analysts to cash out of once hotly contested stakes in Chinese banks to build up their balance sheets.
The lockup on RBS's stake in Bank of China expired late last month. RBS is now 58%-owned by the U.K. government after a bailout.
Other investors in Bank of China include Temasek Holdings Pte Ltd. with a 4.13 stake, and the Asian Development Bank and Bank of Tokyo-Mitsubishi UFJ Ltd., which each own a 0.2% stake. The lockup on Temasek's holdings also expired last month.
The Li Ka Shing Foundation supports numerous charitable activities with grants, sponsorships, and other commitments, according to its Web site.
(Dow Jones)
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