Shenyang’s local government has offered to take Shengjing Bank private in a deal that valued the commercial lender at HK$11.61 billion ($1.49 billion), the bank said on Tuesday, following several years of weak share performance.
Shenyang Shengjing Financial Holding Investment, which is majority owned by Assets Supervision and Administration Commission of Shenyang Municipal Government, is offering HK$1.32 for every unit in Shengjing Bank that it does not already own.
Shenyang Shengjing is the top shareholder in the listed commercial bank. The firm and its affiliate entities jointly hold around 37.23% stake.
The offer is a 15.8% premium to the listed company’s last closing price of HK$1.14 on August 14, when trading on the stock was halted.
The lender’s share price has slumped more than 80% from its highs during early January 2022.
The offer price was at an 86.49% discount to the stock’s net asset value as of 2024 end, David Blennerhassett, an analyst at Smartkarma, said, adding that it is not a premium that long-suffering shareholders would have been holding out for.
The offer underscores how an increasing number of China’s smaller banks are relying on government support to survive a prolonged property market crisis, weighing on a sector that makes up about a quarter of the economy.
Smaller Chinese banks struggle more than their larger peers to raise funds, hampered by weaker credit profiles, narrower business scope and higher risk exposure.
Local governments in China had sold record amounts of so-called special bonds in 2023 to inject capital into struggling smaller banks.
Authorities in Beijing have rolled out a series of measures to stabilise real estate — from easing home-buying restrictions to cutting borrowing costs, but the steps have so far failed to spark a meaningful recovery.
Reuters
