Monday, January 15, 2007

Minsheng Shareholders Approved Fund Venture with RBC

The Wall Street Journal, 15 January 2007

China's securities regulator has approved China Minsheng Banking Corp.'s plan to issue as many as 3.5 billion Class A shares via a private placement, a bank official said yesterday, boosting the bank's dwindling capital base and possibly enabling its largest foreign shareholder, Singapore's Temasek Holdings Pte., to increase its stake.

The share sale could raise as much as 34 billion yuan ($4.4 billion) if the new A shares are sold at the bank's closing price Friday of 9.69 yuan. Minsheng Bank's stock didn't trade yesterday because of a shareholders meeting in Beijing.

Asia Financial Holdings Pte., a unit of state investment firm Temasek, owns a 3.9% stake in the midsize Chinese bank.

Minsheng Bank, the first Chinese bank to have private-sector companies as shareholders, has aggressively increased its lending in recent years and plans to expand into fund management, putting pressure on its capital base. It also is looking at several acquisition targets, the bank official said.

Yesterday, shareholders approved the bank's plan to set up a fund-management venture with Royal Bank of Canada, the bank official said. The new venture, to be named Minsheng Royal Fund Management Co., will be 60%-owned by Minsheng Bank and 30%-owned by Royal Bank of Canada. Three Gorges Financial Co., a unit of China Three Gorges Project Corp., will hold the remaining 10%.

In December, Minsheng Bank sold 4.3 billion yuan of 15-year hybrid bonds to help boost its capital. The bank's capital-adequacy ratio fell to 7.46% at the end of June 2006, below the regulatory minimum of 8%, from 8.26% at the end of 2005.

Class A shares are yuan-denominated shares of Chinese companies listed on mainland exchanges that are restricted to local investors and approved foreign investors.