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Banks (Finance)

ICBC to Sell 10% Stake to Foreign Investors for $3.78 Billion

Strategic Insights

— 2 min read

Industrial and Commercial Bank of China (ICBC) is poised to finalize a deal with three foreign strategic investors in Beijing, where it will sell a combined 10% stake for $3.78 billion. The investors, Goldman Sachs, Allianz Group, and American Express, have enhanced the strategic element of their proposals, including a significant capital contribution from Goldman Sachs. Instead of forming a consortium, the investors will sign separate investment and strategic co-operation agreements with ICBC. The transactions will be subject to a three-year lock-up period and are priced at 1.22 times ICBC's preliminary earnings last year.

Key Takeaways:

  • ICBC is expected to sell a combined 10% stake to Goldman Sachs, Allianz Group, and American Express for $3.78 billion.
  • Goldman Sachs will contribute $2.58 billion to the investment, including its own capital and a Goldman private equity fund, giving it a stake of around 7% and a seat on the ICBC board.
  • Allianz will co-operate with ICBC on bancassurance and product structuring, contributing $1 billion for 2.5% of the bank.
  • American Express will contribute $200 million to strengthen its existing credit card co-operation with ICBC.
  • The transactions will be subject to a three-year lock-up period and are priced at 1.22 times ICBC's preliminary earnings last year.
  • ICBC has about 20% of the banking market and 21,000 branches throughout the country.
  • Goldman Sachs will provide training for ICBC in areas such as risk management, corporate governance, internal control, treasury business, non-performing loan disposal, and product innovations.
  • Large Chinese banks are bringing in foreign capital and expertise to improve their profitability, asset quality, product mix, and governance before opening to foreign competition at the end of this year.

Statistics:

  • $3.78 billion: The combined value of the stake sale to Goldman Sachs, Allianz Group, and American Express.
  • 10%: The combined stake sold to the three investors.
  • 7%: Goldman Sachs' anticipated stake in ICBC.
  • $2.58 billion: The amount Goldman Sachs will contribute to the investment.
  • 2.5%: The stake Allianz will hold in ICBC after the investment.
  • $1.68 billion: The combined investment from Goldman Sachs and its private equity fund.
  • $1 billion: The amount Allianz will invest in ICBC.
  • $200 million: The investment from American Express.

Sources:

  • "China's banks see huge rise in equity capital as profitability improves" (Source: Reuters)
  • "ICBC to sell 10% stake to Goldman Sachs, Allianz and American Express" (Source: Bloomberg)
  • "China's banks bring in foreign capital and expertise" (Source: The Financial Times)

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