Take profit on half, made US$1.6 b
Paper profit another US$1.6 b
Total $3.2 b = $4.6 billion Sing
How about share a bit with Singaporeans who are finding it hard to make ends meet, can?
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GIC reduces stake in Citigroup, makes profit of US$1.6b on sale of shares
By Mok Fei Fei, 938LIVE | Posted: 22 September 2009 1657 hrs
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Government of Singapore Investment Corporation
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GIC sells about half of Citigroup stake for realised profit of US$1.6b
SINGAPORE: The Government of Singapore Investment Corp (GIC) has sold about half its stake in the US financial services giant Citigroup for US$1.6 billion in profit.
This includes coupon interest since it bought the stake in January last year.
The move will bring GIC's stake in Citigroup to just under five per cent.
GIC first said it's changing its convertible preferred shares in Citigroup to common stock in February at US$3.25 a share.
When the exercise was completed on September 11, GIC ended up with 9.4 per cent of Citigroup.
Halving its stake through open market sales means GIC will make a profit of US$1.6 billion, including the proceeds from a seven per cent quarterly coupon interest.
When GIC bought into Citigroup at the beginning off last year, it expected its US$6.88 billion investment to be worth about five per cent of the lender.
But thanks to the financial crisis, that rose to over nine per cent. As a result, GIC said it's bringing it back down to five because that's the exposure it intended to have.
It's understood that GIC sold the stake in several tranches over the last two weeks at an average price of US$4.47 per share.
It also said it will continue its investment in Citigroup as it's confident of its long-term prospects.
Observers have welcomed the move.
Arjuna Mahendran, chief investment strategist, Asia, HSBC Private Bank, said: "The prospect of a similar 25 per cent gain in the next six months is probably not as likely as they were in the last six months. From now on, I think stock market gains are going to be a little more measured."
Others said the risk reduction is prudent given uncertainties over the global economy and the possibility that markets could face a correction ahead.
David Cohen, director of Asian Economic Forecasting, Action! Economics, said: "Should the US economy and the world economy experience a double dip, Citigroup certainly would be exposed to that. And a prudent investor like GIC doesn't want to be exposed to these risks at Citigroup."
Still, GIC remains one of the largest investors in Citi, with the biggest share of 36 per cent belonging to the US government. - CNA/vm
Paper profit another US$1.6 b
Total $3.2 b = $4.6 billion Sing
How about share a bit with Singaporeans who are finding it hard to make ends meet, can?
Home ›
Singapore News
GIC reduces stake in Citigroup, makes profit of US$1.6b on sale of shares
By Mok Fei Fei, 938LIVE | Posted: 22 September 2009 1657 hrs
Photos 1 of 1
Government of Singapore Investment Corporation
Video
GIC sells about half of Citigroup stake for realised profit of US$1.6b
SINGAPORE: The Government of Singapore Investment Corp (GIC) has sold about half its stake in the US financial services giant Citigroup for US$1.6 billion in profit.
This includes coupon interest since it bought the stake in January last year.
The move will bring GIC's stake in Citigroup to just under five per cent.
GIC first said it's changing its convertible preferred shares in Citigroup to common stock in February at US$3.25 a share.
When the exercise was completed on September 11, GIC ended up with 9.4 per cent of Citigroup.
Halving its stake through open market sales means GIC will make a profit of US$1.6 billion, including the proceeds from a seven per cent quarterly coupon interest.
When GIC bought into Citigroup at the beginning off last year, it expected its US$6.88 billion investment to be worth about five per cent of the lender.
But thanks to the financial crisis, that rose to over nine per cent. As a result, GIC said it's bringing it back down to five because that's the exposure it intended to have.
It's understood that GIC sold the stake in several tranches over the last two weeks at an average price of US$4.47 per share.
It also said it will continue its investment in Citigroup as it's confident of its long-term prospects.
Observers have welcomed the move.
Arjuna Mahendran, chief investment strategist, Asia, HSBC Private Bank, said: "The prospect of a similar 25 per cent gain in the next six months is probably not as likely as they were in the last six months. From now on, I think stock market gains are going to be a little more measured."
Others said the risk reduction is prudent given uncertainties over the global economy and the possibility that markets could face a correction ahead.
David Cohen, director of Asian Economic Forecasting, Action! Economics, said: "Should the US economy and the world economy experience a double dip, Citigroup certainly would be exposed to that. And a prudent investor like GIC doesn't want to be exposed to these risks at Citigroup."
Still, GIC remains one of the largest investors in Citi, with the biggest share of 36 per cent belonging to the US government. - CNA/vm
