The Banking and Strategy Initiative

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Deal momentum in China: CAT, GS buy/sell stakes

Even as BofA gets ready to look for another $3-$5 bln from its stake in CCB, its stake corrected as Goldman Sachs sold 0.5% of its 2.9% stake in ICBC for $1.1 bln.

The news of the sale by Goldman Sachs again raised fears of a strategic exit as the Asia trading day was marred by Italian debt resturcturing noises and the banks fell a few pips for the Goldman trade as well. ICBC closed lower by 6% alongwith the drop in the Hang Seng Index. BofA’s 5% stake was valued at $9.2 bln just a week back.

Italy’s $2.2 Tln debt is going to take down with it a few Chinese bank investors as well as BOC was busy paring its Greek exposure till June and likely many wen t for the $2 Tln Italian economy wiith $2.2 Tln in debt

Swapping the Block trade for an IPO

Also new IPO issuers are directly coming to the secondary market, trading new shares into the exchange trading system to get rid of mountainous paper work for IPOs. This new trend rises from the I-Bankers looking for good fee traction int he segment and shares trading near their 52 week highs though big deals on China Pacific, AIG’s AIA sale and BofA’s CCB sale could spell bigger downwinds too

There are 153 companies in Asia-Pacific with a market capitalization of $1 billion or more whose shares closed on Wednesday within 5 per cent of their 52-week high, making them prime candidates for future block deals.

Apollo Hospitals Enterprise in India, airport operator Map Group in Australia, Telekom Malaysia, Japanese retailer Lawson Inc and Singapore developer United Industrial Corp. all trade near their one-year highs.(Reuters)

Goldman Sachs is supposed to be holding only $2.3 bln in Italian debt and market downwinds may only be volatile aftershocks of a long awaited localised Tsunami for the Euro’s 12 year existence outside French and Italian banks as also starved traders like MF Global

Goldman Sachs may have held back on its sale today as prices fell too quickly and may come back for more, unless requested by CIC, currently in charge of the Huijin purchases of bank equity in the Big 4 in China(speculation) Temasek had earlier used the BofA sale as cover to sell and buy back the banks at a lower price

The Caterpillar – ERA deal

After a stunning quarter when its performance exceeded expectations and single handedly helped shrug off news of a US recession, Infraco Caterpillar completed a quick Chinese deal, landing Hong Kong listed ERA mining (makers of coal mining machinery) for less than a $1 bln after paying a fair 33% premium Its July acquisition of Bucyrus is also in the same space and might be a boutique purchase for Supply chain efficiencies.

 

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