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November 30, 2007

Singapore Temasek invest $277 million in China COSCO

Singapore state investor Temasek has sold shares in shipping firm China COSCO (1919.HK: Quote, Profile, Research) worth up to $277 million, its third share sale this week as it raises over $1 billion for new investments.

Temasek, which had a portfolio of S$164 billion ($113.4 billion) as of March, will reap a significant profit from the sale of COSCO shares, which have risen over six times this year.

The sale comes a day after Temasek [TEM.UL] sold $255 million worth of shares in China Construction Bank (0939.HK: Quote, Profile, Research) and follows the sale of a stake worth $571.5 million in Bank of China (3988.HK: Quote, Profile, Research) earlier this week.

Analysts said Temasek, like other big investors, may be raising cash to fund opportunities amid volatile markets.

"From the standpoint of an investor -- which has already made so much money -- there is a risk of volatility in financial markets so it's good to have some cash on the table," said Song Seng Wun, chief executive of CIMB-GK Research in Singapore.

"It gives you the option further down the road to have the flexibility to buy something."

But Song said he does not expect Temasek to be as aggressive as the Middle Eastern sovereign funds who have huge war chests due to record oil prices.

Earlier this week the investment arm of the Abu Dhabi government bought a near 5 percent stake worth some $7.5 billion in top U.S. bank Citigroup (C.N: Quote, Profile, Research).

Temasek spent $1.1 billion on China investments in the year ending in March 2007, including property developer Country Garden (2007.HK: Quote, Profile, Research), luxury watch retail chain Xinyu Hengdeli (3389.HK: Quote, Profile, Research) and Yingli Green Energy (YGE.N: Quote, Profile, Research), a solar equipment producer, according to its annual report.

It also poured money into private equity funds such as CITIC Capital China Partners and Trust Bridge Partners.

However, the bulk of Temasek's investment is in Singapore companies such as Singapore Telecommunications (STEL.SI: Quote, Profile, Research) and Singapore Airlines (SIAL.SI: Quote, Profile, Research), accounting for 38 percent of its portfolio.

About 24 percent of its portfolio is in North Asia, which includes China, Taiwan and South Korea and Temasek recently signed a deal to pay $315 million for a 8.27 percent stake in China Eastern Airlines (600115.SS: Quote, Profile, Research) (0670.HK: Quote, Profile, Research).

Temasek was selling the COSCO shares at between HK$26.75 and HK$27 a share, raising as much as HK$2.16 billion ($277 million) in a deal handled by Goldman Sachs (GS.N: Quote, Profile, Research).

Temasek had a 5.72 percent stake in COSCO's shares listed in Hong Kong according to Reuters Data and the sale represents more than half of its holding.

Courtesy Reuters

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