Singapore’s GIC profits on Citi stake sale
SINGAPORE’S sovereign wealth fund GIC has sold half of the nine per cent stake in Citigroup it acquired amid the banking crisis, booking a profit of $1.6bn (£980m) on the back of the rally in the markets.
GIC offloaded the stake after the conversion earlier this month of $6.8bn worth of its convertible preferred stock in the US bank, at $3.25 a share.
Shares in the Wall Street bank have since risen to close at $4.43 on Monday and rose as high as $4.66 yesterday.
And the fund’s chief investment officer Ng Kok Song said it had also made an unrealised gain of $1.6bn on its remaining holding, bringing the total return on its investment to $3.2bn.
GIC, which manages some $100bn in foreign exchange reserves, stressed that its decision to sell the stake did not mean that its confidence in the bank’s future performance was on the wane.
“A stake below five per cent reflects GIC’s goals and desire to be a portfolio investor,” it said.
“GIC will continue its investment in Citigroup as we are confident of its long-term prospects.”
The fund’s chairman and former prime minister of Singapore Lee Kuan Yew said last year that GIC wanted to continue its investment in Western firms, which includes $18bn in Citigroup and UBS, for as long as 30 years.
However, despite Lee’s vote of confidence, the sale is likely to be taken as a sign that the fund believes that Western banks are set for a new period of sliding share values, reversing recent market rallies.
GIC fared a lot better with its investments in US and European firms than its smaller compatriot Temasek.
That fund recorded a 66 per cent fall in full-year profits to the end of March last week, due to losses on the ill-timed sale of its stakes in Bank of America and Barclays.