Goldman Sachs Sells Shares in China Bank for $2.5 Billion

Goldman Sachs has sold $2.5 billion of shares in the Industrial & Commercial Bank of China to the Singaporean sovereign wealth fund Temasek Holdings and other institutional shareholders.

The deal, announced on Monday, is the latest in a number of transactions by Temasek as it expands its presence across Asia.

Despite concerns that the Chinese economy is becoming overheated, both Western and Eastern banks have been attracted to country’s expanding affluent middle class and their growing taste for consumer goods.

The Singaporean sovereign wealth fund already owns stakes in Bank of China and China Construction Bank. The transaction for the I.C.B.C. shares will increase its stake in the bank to 1.3 percent, according to a company statement.

Under the terms of the deal, Temasek agreed to buy $2.3 billion of I.C.B.C. shares from Goldman Sachs, with 70 smaller institutional investors purchasing the remaining shares worth a combined $200 million, according to a person with direct knowledge of the matter.

Goldman sold its shares in I.C.B.C. at 5.05 Hong Kong dollars each, a 3.1 percent discount on the Chinese bank’s closing share price on Friday, added the person, who spoke on condition of anonymity as he was not authorized to speak publicly.

Goldman originally bought a 4.9 percent stake in I.C.B.C. after the bank’s initial public offering in 2006, but has been slowly selling its shares. I.C.B.C. is the world’s largest bank by market value.

The deal follows Temasek’s expansion in Indonesia earlier this month after DBS Group Holdings of Singapore agreed to buy Bank Danamon of Indonesia from Temasek and other investors for $7.2 billion in one of the largest takeovers in Southeast Asia’s financial services industry. Temasek already owned a 29 percent stake in DBS, and the deal increased Temasek’s stake in DBS to 40 percent.

The sovereign wealth fund, which has roughly $150 billion of assets under management, has a rocky track record of investing in banks.

During the recent financial crisis, Temasek lost about $5 billion after investing in a number of Western banks, including Merrill Lynch and Barclays of Britain.