An undisclosed investor yesterday sold HK$405 million ($52 million) worth of shares in China Construction Bank (CCB). The UBS-arranged block trade, which was launched during the lunchtime break, was said to have been snapped up by a handful of Asian investors in less than a minute.
A total of 100 million shares were sold at a fixed price of HK$4.05 each, representing a 2.9% discount to the morning session closing price of HK$4.17. CCB's shares gained 4.8% on Friday, and even after yesterday's sale, they continued to rise -- finishing 2.9% higher at HK$4.20.
The speed at which the deal was completed and the tight discount was obviously a function of the size, with the offering accounting for less than a quarter of the daily trading volume over the past three months. Some market participants even questioned why the deal was done as a block trade at all, rather than dribbled out into the market during the course of the day. On a strong day like yesterday when the Hang Seng Index rose 3.6% and the counter itself was up 2.9% this should have been no problem, they say. Most of the day's gains in the overall market did, however, come in the afternoon session, after the CCB deal was already completed, with the HSI having finished the morning session with a more modest 1% gain.
Still, the quick and tightly priced transaction should be heartening to other investors, including Bank of America (BoA). In January, the bank sold 2.5% of CCB's H-share capital, raising approximately $2.8 billion, after which it was left with approximately 17%. Half of that is tied up in a long-term lockup, but the other half is only subject to a 120-day lockup following the sell-down in early January and it is entirely possible that the cash-strapped US bank is looking to offload more CCB shares when it is able to do so in early April.
CCB's share price has come down slightly since the BoA sell-down in January when it was trading at HK$4.45. However, because of the larger size that block required a wider discount of 11.9%, which meant BoA sold the shares at only HK$3.92 apiece.
Other foreign banks too have lockups in Chinese banks that are about to expire. A consortium consisting of Goldman Sachs, Allianz and American Express will be able to sell part of its 7.3% stake in Industrial and Commercial Bank of China (ICBC) from April 28. The rest can be sold in October.
