In comments to various media, the Singapore investment company has said that the selling of shares is part of its normal portfolio management. The share prices of all three companies involved in the placements this week are up substantially from the time when Temasek invested.
China Cosco Holdings, which was the target for yesterdayÆs sell-down, is a case in point, having rallied 465% this year alone. And thatÆs despite the fact that the shipping companyÆs share price has come off 28% from its all-time high in late October. The price jumped 9.9% to HK$28.35 yesterday on news that the Mainland regulators had approved its plan to sell approximately $2.2 billion worth of shares to its parent company and another $800 million to a small group of institutional investors to help fund the acquisition of dry-bulk ships
Temasek raised a total of HK$2.14 billion ($275 million) from the sale of 80 million China Cosco shares at a price of HK$26.75 apiece. The final price represents a discount of 5.6% versus yesterdayÆs closing price.
Demand was strong with more than 60 investors submitting orders, but as with other recent placements, they were reluctant to bid up the price and the deal was priced at the bottom of the indicated range for the maximum discount. The shares were offered in a range between HK$26.75 and HK$27, which translated to a discount of 4.8% to 5.6%.
The sale, which was arranged by Goldman Sachs, represented about half of TemasekÆs remaining stake in China Cosco, or about 3.1% of the H-share capital. Temasek bought into the company during its IPO in June 2005 at a price of HK$4.25 per share. It has been reducing its holdings gradually through sales in the market.
Earlier this week, it also sold $570 million worth of shares in Bank of China and $255 million of stock in China Construction Bank, bringing the total amount raised from its China portfolio this week to $1.1 billion. The other two placements were arranged by Morgan Stanley.
Temasek has an investment portfolio valued at about $100 billion, of which $15 billion has been invested in North Asia (China, Taiwan and Korea), it says on its website. Earlier this month, it signed a definitive agreement to buy an 8.3% stake in China Eastern Airlines for $315 million. Singapore Airlines, in which Temasek holds a controlling 55% stake, already owns 15.7% of China Eastern.
According to a source, the China Cosco placement was covered in one hour, but the books were kept open until midnight Hong Kong time to allow US-based investors a chance to participate. In the end, about 60% of the demand came from Asia, while the rest was split fairly evenly between Europe and the US. Several long-only funds stepped up and filled the gap left by hedge funds which have been less active in placements during the market volatility.