China’s sovereign-wealth fund is coming to the aid of a troubled lender in a RMB 100 billion ($14.28 billion) bailout, the latest show of government support for the banking sector, which has come under intensifying financial stress as the economy slows, reported the Wall Street Journal.
Hengfeng Bank, based in eastern China’s Shandong Province, will sell 100 billion shares at a valuation of RMB 1 per share, almost all of them to government-backed investors, according to the bank and one of its backers.
Central Huijin Investment, the investment arm of China’s sovereign-wealth fund that owns stakes in major state-owned banks and other financial institutions, will purchase 60% of Hengfeng’s 100-billion-share issuance, said Hengfeng.
Shandong Financial Asset Management, a local-government-backed entity, will purchase another 36 billion shares, while Singapore’s United Overseas Bank, which holds a minority stake in Hengfeng Bank, and other unnamed investors will purchase the remaining 4 billion shares.
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