Chillin' out till it needs to be funded
Bank of America Corp., seeking to bolster its financial standing because of new U.S. government requirements, raised $7.3 billion from Asian investors Tuesday through the sale of a roughly 5.7% stake in China Construction Bank Corp., people familiar with the matter said.
For the U.S. lender, the move marks a step toward raising $34 billion in capital needed to meet the requirements of a U.S. government stress test for lenders. The sale also illustrates how Asian investors are willing to buy up Western-owned holdings in China, increasing their hold in that area and providing proceeds to cash-hungry Western banks.Bank of America can sell one-third of its 16.7% stake in China Construction Bank. Here, Shanghais Jinmao tower rises over a CCB branch last week.
On Tuesday, the Charlotte, N.C., bank sold 13.5 billion shares, or one-third of its 16.7% stake, in China Construction Bank for HK$4.20 54 U.S. cents a share, according to people familiar with the situation. China Life Insurance Group Co., Singaporean sovereign-wealth fund Temasek Holdings Pte. Ltd., and private-equity fund Hopu Investment Management Co. bought the block of shares together.
The price represents a 14% discount to Mondays closing price of HK$4.90 a share. In recent days, banks representing the U.S. lender had sought buyers at higher prices that more closely matched current market levels, according to people who had been approached. A reduction in price helped seal the deal, said one person familiar with the matter.