HSBC takes Hang Seng Bank private

Hang Seng shares up 26% on $37bn deal

- SELENA LI SCOTT MURDOCH

HSBC said yesterday it planned to privatise Hong Kong's Hang Seng Bank in a deal worth HK$106.1 billion ($13.63 billion) after its majority-held subsidiary has come under fire for its performance and exposure to faltering property markets in the city and mainland China.

HSBC will offer HK$155 per share for the 36.5% of shares it does not already own, giving Hang Seng Bank a total valuation of $37 billion.

Hang Seng Bank shares surged to as high as HK$168 in early trading before retreating to HK$150.3 by midday, up 26.3% but below the offer price.

HSBC's Hong Kong-listed stock fell 6.2% to HK$103.7 by the break, a far worse performance than the 0.15% decline in the benchmark Hang Seng Index.

HSBC said the offer was made at a 30.3% premium to Hang Seng Bank's closing price of HK$119 on Wednesday.

The transaction marks the largest banking acquisition in Hong Kong in more than a decade, since OCBC purchased Wing Hang Bank in 2014 via a $5.3 billion deal, according to Michael Makdad, senior equity analyst at Morningstar.

"This is an investment for the mediumto long-term in what is a leading local bank in Hong Kong, an iconic franchise, distinct and unique customer proposition and a strong financial standing with very good liquidity ratios and capital ratios," HSBC CEO Georges Elhedery told reporters yesterday.