Singapore cashes in half of its Citigroup stake
This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.
‘Nobody ever went broke taking a profit,’ as the old line goes. The government of Singapore appears to have heeded that advice by selling half its stake in Citigroup Inc. after the recent big rally in the bank’s shares.
From Bloomberg News:
The Singapore government pared its stake in Citigroup to less than 5%, realizing a $1.6 billion profit as the city-state’s investment companies reduce holdings in European and U.S. banks. Government of Singapore Investment Corp. sold the stock after converting preferred shares in the New York-based bank into a more than 9% common-equity stake, it said in a statement. The company, manager of more than $100 billion of foreign-exchange reserves, also has a $1.6 billion paper profit on its remaining holding.
Singapore made a $6.9-billion investment in Citi preferred shares in January 2008. Those shares were convertible into common stock at a conversion price of $3.25 each.
For much of this year Singapore was underwater on the conversion price as Citi’s common stock languished.
But the rush of speculators into the stock in August -- driving the price from $3.17 at the end of July to $5 by the end of August -- put Singapore’s stake back into the black. The government converted its preferred shares to common on Sept. 11. Citi’s shares closed that day at $4.61.
Singapore said it sold half its stake to reduce its investment to the level it intended when the preferred stock was purchased. The government said it would continue to hold the rest of its Citi stock ‘as we are confident of its long-term prospects,’ according to Reuters.
News of the sale isn’t unnerving other Citi investors today: The stock was up 23 cents, or 5.2%, to $4.66 at about 10:45 a.m. PDT.
Wall Street has been focused on expectations that Citi will takes steps soon to reduce the federal government’s 34% stake in the bank, the price of Uncle Sam’s rescue of the company late last year.
Citi is considering a plan to issue new shares to the public while cashing out some of the goverment’s stake, the Wall Street Journal reported last week.
-- Tom Petruno