Goldman exits China's ICBC, seven years and billions later

HONG KONG Mon May 20, 2013 3:55pm EDT

A Goldman Sachs sign is seen over their kiosk on the floor of the New York Stock Exchange, April 26, 2010. REUTERS/Brendan McDermid

A Goldman Sachs sign is seen over their kiosk on the floor of the New York Stock Exchange, April 26, 2010.

Credit: Reuters/Brendan McDermid

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HONG KONG (Reuters) - Goldman Sachs Group Inc (GS.N) launched the sale of about $1.1 billion worth of Hong Kong-traded shares in Industrial and Commercial Bank of China (1398.HK) on Monday, offering its entire remaining stake in the world's biggest bank by market value.

The sale would be the final chapter in Goldman's investment alongside clients and employees in China's ICBC. Prior to its 2006 initial public offering, ICBC was a technically insolvent state institution, reeling from the bad loans that had saddled China's financial industry.

ICBC's fortunes turned after it went public, and the bank grew along with China's economic boom. The bank's $240 billion market value is just shy of the combined worth of J.P. Morgan Chase & Co (JPM.N) and Barclays (BARC.L).

Goldman offered the ICBC shares in a range of HK$5.47 to HK$5.50, equivalent to a discount of up to 3 percent to Monday's close of HK$5.64, according to a term sheet.

Goldman agreed to invest $2.58 billion in ICBC in January 2006, using internal funds that invest a mix of client, employee and corporate cash. The bank has sold down that stake through six deals since 2009.

If Goldman is able to sell its final stake for $1.1 billion, total gross proceeds from the sales would be $10.1 billion. Calculating Goldman's own profit on the stake is tricky because not all of the investment came from its own balance sheet, and the cost of acquiring and maintaining the ICBC stake is unknown.

Since 2006, Goldman has reported $3.5 billion in net revenue related to ICBC in quarterly filings.

The sale would be Goldman's third in about a year. The New York-based investment bank raised $2.5 billion from a partial selldown of ICBC in April 2012, most of which was bought by Singapore state investor Temasek Holdings Ltd TEM.UL, and another in January 2013 worth $1 billion.

(Reporting by Fiona Lau of IFR and Elzio Barreto in Hong Kong; Additional reporting by Lauren Tara LaCapra; Editing by Miral Fahmy, Michael Flaherty and Jeffrey Benkoe)

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