Temasek Raises Stanchart Stake To 15%

Source : The Straits Times, Aug 23, 2007

SINGAPORE investment company Temasek Holdings has raised its stake in Asia-focused Standard Chartered Bank (Stanchart) to 15.3 per cent, up from 14.1 per cent.

The share purchase, made on the open market last Friday, is estimated to have cost Temasek about £271 million (S$820 million), based on the counter's closing price that day.

Temasek has been increasing its interest in the British bank since last March, one year after it bought an 11.6 per cent stake from the estate of the late tycoon Khoo Teck Puat, according to regulatory statements made by Stanchart.

These investments appear to have cost about £900 million in total, including the latest transaction - adding to an estimated £2.3 billion from the original investment last March.

'We have increased our stake in what we have always considered to be a good investment, the reason we went in, in the first place,' said a Temasek spokesman yesterday.

Financial services are a key investment area for Temasek.

Stakes in more than a dozen banks, including China Construction Bank, Bank of China and Bank Danamon in Indonesia, make up 38 per cent of its $164 billion portfolio.

In the previous year, Temasek's exposure to the sector was 35 per cent of a $129 billion portfolio.

Last month, the Singapore firm bought into a billion-dollar battle royale for Dutch bank ABN Amro, throwing in its weight with Britain's Barclays.

It is paying £975 million for a 2.1 per cent stake in Barclays, which is locked in a takeover competition with a group of banks led by Royal Bank of Scotland.

Stanchart, which makes most of its profits in Asia, reported a 26 per cent jump in half-year earnings to US$1.37 billion (S$2.09 billion) on Aug 7.

The stock has risen 4.7 per cent so far this year, making it the best-performing British bank. In contrast, the nine-member FTSE All-Share Banks Index has fallen 11.1 per cent in the same period.

Temasek's first share purchase for the year was on March 7, when it bought 12.8 million shares. The stock closed at £13.99 that day, after a steep fall from February prices and below the £15.24 close when it bought its major stake from Mr Khoo's estate.

The company appears to have bought more shares during the counter's subsequent run up to an all- time high of £17.265 on June 1, including 4.5 million shares on May 29 when the counter closed at £16.80.

Temasek made another investment on July 27 before the most recent purchase of 17.4 million shares last Friday, when Stanchart closed at £15.60 amid a credit crunch that has rocked world financial markets.

Stanchart shares, as with the rest of the market, have since rebounded and were trading at £15.75 as at 8pm yesterday. This makes Temasek's stake in the bank worth £3.38 billion.