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Deutsche Bank may be top Huaxia holder
(Shenzhen Daily)
Updated: 2005-10-21 13:39
Deutche Bank has an option to buy German private bank Sal. Oppenheim’s stake
in mid-sized Chinese lender Huaxia Bank (SHA: 600015), setting it up to become
the bank’s top shareholder.
The two German banks this week confirmed they would together invest US$329
million to take a 14 percent stake in Huaxia Bank marking their first direct
investment in the sector.
The investment gave Deutsche Bank a 9.9 percent stake in Huaxia, and
Oppenheim a 4.1 percent share, but the deal included an option for Deutsche Bank
to buy Oppenheim’s portion, Huaxia said in a statement posted on the Shanghai
Stock Exchange’s Web site.
The statement also said Deutsche Bank also had priority if other Huaxia
shareholders wished to sell stakes.
If Deutsche Bank were to exercise the option, it would vault Germany’s top
lender past the current top shareholder, State-owned steelmaker Shougang Group,
which has 11.9 percent.
Analysts and the China Securities Journal said the option and Shougang’s
intent to dilute its holdings through a government-led drive to pare State
involvement in listed firms meant Deutsche Bank will have the option to control
Huaxia.
Analysts cited the example of Shenzhen Development Bank (SZA: 000001), where
U.S. equity fund Newbridge Capital paid US$150 million to buy 17.89 percent, and
become the largest shareholder, of the Chinese lender last year.
The purchase allowed Newbridge to reshuffle the bank’s board, giving the U.S.
firm the top two seats of chairman and president, and assume effective control
of the Chinese lender.
Deutsche’s near 10 percent investment gave it the right to appoint two
directors to Huaxia’s 10-person board, Huaxia said.
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