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Tue, Jul 13, 2004 - Page 12 News List

Deal between US equity firm, China bank is called off

AP , SHANGHAI

Plans for China Minsheng Banking Corp, the country's first privately held bank, to sell a 4.8 percent stake to US private equity firm Newbridge Capital Ltd have been called off, the Chinese side says.

China National Coal Group Corp notified Minsheng it has withdrawn from a deal that called for it to sell the stake to Newbridge, the bank said in a notice published in the China Securities Journal. Newbridge is an affiliate of major US private equity firm Texas Pacific Group.

No reason was given for the decision to scuttle the deal, which had already been approved by Minsheng's board of directors, the state-run newspaper Shanghai Daily reported yesterday.

Under the deal set in January, Newbridge had planned to buy 174.92 million shares in Minsheng, acquiring a 4.82 percent stake, the report said.

China Minsheng Banking Corp was founded in 1996 as China's first privately owned bank. It is planning to make an initial public offering of its shares in Hong Kong sometime this year. Its shares are already traded on the Shanghai Stock Exchange.

The end of the plan between Newbridge and China Minsheng marks a new chapter in the US investor's winding road toward entry into Chinese banking.

In late 2002, Newbridge agreed to buy 17.6 percent of Shenzhen Development Bank, but the deal fell apart in May last year and the dispute went to arbitration.

In May this year Shenzhen Development Bank said that the two sides had resolved their differences, making Newbridge the first foreign company to take a controlling share in a state-owned local bank.

A revised plan calls for Newbridge to pay 1.2 billion yuan (US$145 million) for 17.89 percent of the bank and become its largest shareholder.

China has allowed limited foreign investment in its banks as part of a strategy of improving management and modernizing the state-owned banking industry.

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