The "noble" bank HZBANK's equity "changes": foreign capital exits completely, NCI takes over for 4.3 billion

One of the banks with the highest valuation in the A-share market, HZBANK's equity has undergone significant changes.

On the evening of January 24, HZBANK announced "Notice on Shareholders Signing the Share Transfer Agreement and Changes in Equity."

The announcement revealed that HZBANK's shareholder Commonwealth Bank of Australia recently signed a share transfer agreement with NCI, agreeing to transfer all of its approximately 329 million shares in HZBANK, which accounts for 5.45% of the company's total issued share capital.

The transaction price for this share transfer has a 10% discount compared to the market price.

HZBANK has always been one of the "noble" bank stocks with the highest valuation (measured by price-to-book ratio) in the A-share market, ranking fourth in the industry for its latest price-to-book ratio.

Commonwealth Bank of Australia "clears out" its shares

The shareholder transferring HZBANK's equity is its fourth-largest shareholder, Commonwealth Bank of Australia.

The bank signed the "Share Transfer Agreement between Commonwealth Bank of Australia and NCI" on January 24, 2025, agreeing to transfer approximately 329 million shares it holds in the company to NCI, accounting for 5.45% of the total issued ordinary shares of the company.

It is reported that this change in equity is still subject to regulatory approval procedures.

Transfer price discounted by about 10% compared to market price

The announcement shows that the parties to the transfer agreed that the purchase price per share for NCI to acquire the HZBANK shares held by Commonwealth Bank of Australia is RMB 13.095 per share, with the total transfer price amounting to approximately RMB 4.3166 billion.

From the date of signing the "Share Transfer Agreement" to the delivery date, if HZBANK approves and implements actions such as issuing bonus shares, capital reserve conversion, or rights issues that lead to adjustments in HZBANK's stock price and/or share quantity (as applicable), the transfer price and the number of shares will be adjusted according to the adjustment mechanism described in the "Share Transfer Agreement."

As of January 24, HZBANK's latest closing price was RMB 14.59 per share. Compared to the market price, the transfer price is approximately 10% lower.

NCI will sell part of its HZBANK convertible bonds

This transaction has also led NCI to announce its thoughts on the HZBANK convertible bonds it holds According to reports, before this equity change, NCI held approximately 4.655 million "HZBANK convertible bonds" in its own name, while its subsidiary, Xinhua Asset Management Co., Ltd. (hereinafter referred to as "Xinhua Asset"), held 137,770 "HZBANK convertible bonds" with its own funds. The combination insurance asset management products issued by Xinhua Asset held 105,800 shares of the company and 2,478,500 "HZBANK convertible bonds." NCI and its concerted parties collectively held 105,800 shares of the company and approximately 7,271,400 "HZBANK convertible bonds."

After the resolution to transfer, NCI and its concerted party Xinhua Asset plan to sell all convertible bonds held by the "NCI traditional account" within the next 12 months, and the latter will convert all of them into shares.

No Actual Controller After Transfer

Summarizing the above announcements, after this equity change, NCI and its concerted parties will hold a total of 5.87% of the A-share common stock of HZBANK.

After this equity change, Commonwealth Bank of Australia will no longer hold A-share common stock of HZBANK, achieving a complete exit.

According to relevant regulations from national financial supervision and management departments, the company shares obtained by NCI through this transaction cannot be transferred within 5 years from the date of completion of the transfer registration.

According to the announcement, this equity change will not lead to a change in the controlling shareholder or actual controller of HZBANK, and the company still has no controlling shareholder or actual controller.

Foreign Capital Lock-up Period Will Expire

It is noteworthy that the Commonwealth Bank of Australia almost transferred its equity at the "first opportunity" when the share lock-up period was about to expire.

Previously, the Commonwealth Bank of Australia acquired shares of HZBANK held by Hangzhou Urban Construction Investment Group Co., Ltd. and Hangzhou Transportation Investment Group Co., Ltd. on February 28, 2022, and at that time made a commitment to a three-year share lock-up.

According to the prudent assessment of both parties involved in this equity change transaction, it is expected that the delivery date of this equity change will be after February 28, 2025, at which point the lock-up commitment of Commonwealth Bank will expire.

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