Majority's headache

9 August 2010 By Wei Gu

The giant Chinese bank wants to buy out the minorities in its Hong Kong subsidiary. The likely $1.3 bln deal would allow ICBC to grow its overseas business fast. But the logic of the transaction, and ICBC’s deep pockets, may stiffen the minorities’ resolve to get a high price.

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ICBC said on July 29 its board has approved its plan to privatise ICBC Asia, its Hong Kong commercial banking unit. ICBC already owns 72 percent.

Under Hong Kong market rules, any privatisation proposal would require approval of 75 percent minority shareholders with no more than 10 percent voting against the deal.

ICBC also said it plans to raise as much as $6.6 billion from existing shareholders.

ICBC trades at 2.2 times 2009 book value while ICBC Asia trades at 1.7 times book.

ICBC's top three minority shareholders, Standard Life, Baring Asset Management bank and Fidelity, owned about 7.3 percent of the company at the end of April, according to Thomson Reuters data.

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