Product details

Newbridge Capital focused its business on financial investments in emerging markets and won fame through the acquisition of the Korea First Bank. After China?s accession into the World Trade Organisation in 2001, China had quickened the process of banking reform. Shenzhen Development Bank (SDB) was the first listed bank in China. Disappointed with SDB?s performance, the Shenzhen government, the controlling shareholder of SDB, decided to sell its stake to foreign investors. For Newbridge, this was a good opportunity to make profits through restructuring problem banks. However, it was difficult to price the targeted shares which were non-negotiable. Generally, non-negotiable shares were traded at a price much lower than that in the secondary market. Though the market-to-book ratio could serve as a pricing method, there was often much dispute over the premium above net asset per share. While Shenzhen government was worried about being blamed on selling too cheaply, Newbridge felt anxious for SDB?s non-performance assets.