Date
16 August 2017
Bank of East Asia chairman David Li is facing questions over a deal to sell new shares to Sumitomo Mitsui group. Photo: Bloomberg
Bank of East Asia chairman David Li is facing questions over a deal to sell new shares to Sumitomo Mitsui group. Photo: Bloomberg

Hedge fund takes BEA to court over Sumitomo deal

Hedge fund Elliott Management Corp. has launched legal action against Bank of East Asia Ltd. (BEA) over the latter’s deal last year to sell nearly US$1 billion worth of shares to Japan’s Sumitomo Mitsui Banking Corp. 

A group of companies linked to Elliott has taken BEA and its chairman David Li to court in Hong Kong, seeking information over the bank’s decision last September to sell about 222 million new shares to Sumitomo, the Wall Street Journal reported Wednesday.

Elliott has questioned BEA’s need to raise additional capital and suggested that the lender was abusing a mandate to issue additional shares, the report said.

The New York-based hedge fund is said to hold about 2.5 percent stake in BEA.

A spokesman for BEA was quoted as saying that the bank disagrees with the plaintiffs.

“BEA and its board believe that the proposed placement is in the best interests of our shareholders as it will further strengthen the bank’s core capital by means of investment on the part of a long-term committed shareholder and highly reputable financial institution,” he said.

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CG/RC

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