Larry Schlesinger | 12 December 2012

Chinese sovereign fund cashes in on share price surge to reduce holding in Goodman Australia

China’s sovereign wealth fund CIC has reduced its stake in industrial property developer and manager Goodman Australia by 6.9%.

Goodman Australia is part of Goodman Group, an international integrated property group that owns, develops and manages logistics and business space across continental Europe, the United Kingdom and the Asia-Pacific region.

CIC has sold $519.2 million worth of shares (116.7 million shares at $4.45 a share) to leave it with a 9.9% holding in Goodman Australia.

The shares were purchased by local and foreign institutions at 3% discount to the last trading price, reported the Australian Financial Review.

The downsizing of CIC's stake follows a day after the Goodman Australia Industrial Fund announced an equity raising of $624 million and an extension of the fund term by four years to 2019.

CIC benefited from a 66% surge in the Goodman share price over 2012, with the listed property trust outperforming Australia’s biggest A-REIT, Westfield, by a significant margin.

The money is being returned to China rather than being invested in Goodman’s unlisted funds as had been expected.

CIC is expected to retain its remaining stake for at least another 12 months due to their being a tax advantage.

CIC is expected to hold onto its remaining stake for at least another year as there is a tax advantage to doing so. Contrary to expectations, it is thought to be repatriating the cash back to Beijing rather than reinvesting the money in some of Goodman’s unlisted funds.

CIC bought a 17.8% stake in Goodman in the wake of the GFC, which rescued the group from the risk of collapse.

Goodman's current portfolio consists of 191 properties located in Sydney, Melbourne, Brisbane, Adelaide, Canberra and Perth.

Blue-chip tenants include Toll, Linfox, DHL, Coles, Coca-Cola, TNT and Brambles.

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