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DJ CIC Trims Stake In Noble Group
30 Sep 2014 20:17
DJ CIC Trims Stake In Noble Group -- 2nd Update By P.R. Venkat and Jake Maxwell WattsSINGAPORE--Sovereign-wealth fund China Investment Corp. has sold a portion of its stake in commodity trader Noble Group Ltd., which prompted the shares of the Singapore-listed trader to suffer their biggest one-day fall in three years.
China's sovereign-wealth fund raised 396 million Singapore dollars (US$310.6 million) by selling close to a third of its existing stake in Noble Group, people with knowledge of the deal said Tuesday. News of the stake sale by one of the largest shareholders in the commodity firm triggered a fall of as much as 9% in Noble Group shares to S$1.27 apiece on the Singapore stock exchange, prompting the market regulator to seek an explanation from the commodity trader. By comparison, Singapore's FTSE Straits Times Index closed 0.4% lower. Noble Group shares ended the day 6.8% lower at S$1.30.
In a statement late Tuesday to the Singapore Exchange, Noble Group confirmed that CIC, which is one of the largest shareholders in Noble, had sold a portion of its stake and will now hold 9.4% of Noble from 13.8% previously.
The Chinese sovereign-wealth fund spent US$850 million, or S$2.1137 per share, in 2009 on a stake in Hong Kong-based Noble Group, a diversified commodities company with assets ranging from Brazilian sugar mills to Australian iron ore and oilseed-processing facilities in China and India. CIC, the world's fifth-largest government-controlled fund, with US$600 billion under management, has in recent months been shifting its focus from the energy and commodities sector to build its holdings in the U.S. and some European countries, where an economic recovery is under way.
Founded in 2007, CIC invests part of China's foreign-exchange reserves abroad. In the years after its founding, it emphasized investments on natural resources and the developing world. It regarded bets on commodities as a way to profit from China's surging growth, since that is a major driver of demand for energy, minerals and food. It also saw the developing world as faster-growing than the U.S. and Europe, which had struggled to put the financial crisis behind them. But China's slowing economic growth has taken some of the appeal away from commodities investments.
Noble Group said in its statement that the stake sale by CIC "is part of CIC's overall portfolio rebalancing exercise." People familiar with CIC's thinking said earlier that they believe the U.S. Federal Reserve's recent decision to taper its easy-money policies will lead to capital flowing back to the developed world.
"We believe a quick turnaround in agriculture is unlikely, with headwinds at Noble likely to persist in its various divisions," UBS said in a note.
People close to the deal said that CIC sold nearly 300 million shares at S$1.32 each, which is a 5.4% discount to Monday's closing price of S$1.395 a share. The price is at the lower end of the S$1.32-S$1.35 price range indicated earlier by one of the people with knowledge of the deal.
"This [CIC sale] is probably not the best news in the world," said Oversea-Chinese Banking Corp. Analyst Carey Wong, who covers Noble Group. Mr. Wong said the indicated price range was at a discount to the previous close, which could have driven the stock's sharp drop Tuesday morning.
J.P. Morgan was the sole adviser on the deal.
Write to P.R. Venkat at venkat.pr@wsj.com
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(END) Dow Jones Newswires
September 30, 2014 08:17 ET (12:17 GMT)
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