Temasek in $6.6b bank purchase

SINGAPORE - Singapore's state-owned investment firm Temasek said yesterday it had agreed to buy an 11.55 per cent stake in Asia-focused bank Standard Chartered, making it the biggest shareholder in the UK lender.

Temasek said it had agreed to buy 152.4 million ordinary shares of Standard Chartered from the estate of Asian tycoon Khoo Teck Puat, who died in 2004.

It declined to say how much it would pay for the stake. At Monday's closing price of £15.24 per share, the stake would be worth £2.3 billion ($6.68 billion).

"Investing in Standard Chartered is consistent with our focus on Asia and on its financial services sector," Temasek said.

The London-headquartered bank, which has a market cap of £17.8 billion, earns more than three-quarters of its profit in Asia and also has operations in Africa and the Middle East.

"We note the change of ownership of the shares and we welcome Temasek as a long-term investor," a Standard Chartered spokesman said.

Temasek said it had not discussed the acquisition with the board and management of the bank prior to the investment.

Industry sources in London said the entry of Temasek was positive for StanChart. One long-term investor has been succeeded by another, and uncertainty has been removed over the future of a large tranche of shares, they said.

Markets have long speculated on when Khoo's children, including the Singapore film director Eric Khoo, would sell their stake, the biggest single StanChart holding.

Robert Parker, London-based vice chairman of asset management at Credit Suisse, which has more than US$400 billion ($668.5 billion) in assets worldwide, said buying the StanChart stake was a savvy deal for Temasek.

"This deal may discourage another bank from bidding for Standard Chartered," Parker said.

Temasek said it had the necessary funding for the deal.

Last week, Temasek raised US$1.42 billion from share sales, including the sale of a 4.7 per cent stake in Singapore Telecommunications for S$2 billion ($2.07 billion).

The firm - headed by Ho Ching, the wife of Singapore's Prime Minister - has regularly sparked controversy abroad.

A Temasek-led investment group paid US$3.8 billion to acquire Thai telecoms group Shin Corp this year, sparking a political crisis in Thailand and protests against Thai Prime Minister Thaksin Shinawatra and against Singapore.

- REUTERS, BLOOMBERG