China Cinda Asset Management Co. Ltd. (01359.HK) has put in the sole bid for a small bank in Hong Kong that BOC Hong Kong Holdings Ltd. (02388.HK), the bank’s parent firm, wants to sell for US$8.8 billion, Reuters reported.
That would be a record amount for any acquisition of a lender in the city.
News of the bid for Nanyang Commercial Bank (NCB), which Cinda and the bank announced in separate statements, pushed Cinda shares down as much as 11 percent, as investors questioned the value of such a pricey deal amid China’s slowing economic growth and a sharp downturn in the stock market.
The shares recouped some gains and closed down 1.7 percent.
Cinda, one of four state-backed managers of bad debt in China, did not disclose the value of its bid, and warned that it was too early to say if the deal would go ahead.
But the US$8.8 billion reserve price equates a price-to-book ratio of 1.95 for NCB, or nearly double the 1.05 average ratio for listed Hong Kong banks, Thomson Reuters data shows.
Reuters had reported that other potential bidders for NCB, such as an investment firm for the Guangdong provincial government had changed their minds about the deal, put off by the steep asking price.
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