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 Merrill Lynch & Co.'s largest shareholder, Temasek Holdings Pte., may be looking to increase its stake in the beleaguered bank on the chance that the company is on the rebound.
Bloomberg is reporting
that the Chairman of a Singaporean sovereign wealth fund, S.
Dhanabalan, made the comments in a speech today. "If there's an
opportunity, we would like to look at it," said Dhanabalan. "Whether we
do it depends on our assessment and risk diversification."
The vote of confidence may surprise some, since Merrill's shares have dropped roughly 55% since December 2007, when Temasek invested $5 billion for a 5% stake in the bank. The investment was part of a rush by sovereign wealth funds to spend $200 billion buying large stakes in US financial firms at what they then considered deep discounts. However, the wealth funds were unable to catch the falling knife and have been burned as financial stocks continued to plummet thanks massive write-downs related to mortgage-backed assets. Having learned their lesson, no sovereign wealth fund has stepped up to help Lehman Brothers Inc. out with its liquidity problems. Temasek also faces regulatory problems with buying more of Merrill, as foreign investors are prohibited from owning more than 10% of a US bank. Last month Temasek committed another $900 million to Merrill as it bought another $3.4 billion in stock through a Merrill offering. However, the Singapore state-owned investment company made the purchase under an earlier price protection agreement, so Merrill will effectively fund $2.5 billion of the purchase. The deal will push Temasek's stake beyond the 10% limit and require regulatory approval, however. - George White See Bloomberg story See story on Temasek's July investment on TheDeal.com See Dealscape post on SWFs and Lehman Brothers See feature profile on Temasek on TheDeal.com See Dealscape posts on sovereign wealth funds Categories Deal Video
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