* GIC cuts stake in UBS to 2.7 pct from 5.1 pct
* Shares sold at 16.1 Sfr vs 16.61 Sfr Monday close -
* GIC to keep profitable stake in Citi
(Adds placement price, market reaction)
By Michael Shields and Anshuman Daga
ZURICH/SINGAPORE May 15 Singapore sovereign
wealth fund GIC Private Limited, which invested in UBS
to support it during the 2008/09 global financial crisis, said
it had cut its stake in the Swiss bank at a loss, partly because
of changes in the lender's strategy and business.
GIC, which manages more than $100 billion globally, said it
had reduced its stake to 2.7 percent from 5.1 percent.
People familiar with the matter told Reuters GIC placed its
shares at 16.10 Swiss francs each, a discount to Monday's close
at 16.61 francs. The stock was indicated 1.9 percent lower in
Selling 93 million shares at 16.10 would raise 1.5 billion
francs ($1.51 billion). GIC's original investment as the
financial crisis erupted was worth around 11 billion francs.
"GIC made the UBS sale despite the loss because conditions
have changed fundamentally since GIC invested in UBS in February
2008, as have UBS' strategy and business," Lim Chow Kiat, chief
executive of GIC, said in a statement issued on Monday.
"It makes sense now for GIC to reduce its ownership of UBS
and to redeploy these resources elsewhere," he said.
The fund said, however, that its investment in U.S. bank
Citigroup Inc, also made at the height of the global
financial crisis, was in the black and that combined returns for
UBS and Citi were positive in "mark-to-market terms."
GIC measures its performance on an overall portfolio basis,
based on long term rather than annual returns.
GIC is keeping its profitable investment in Citi.
"We remain a shareholder of Citibank. As with all our
investments, we continue to manage our position based on our
assessment of the fair value of Citigroup and other investment
opportunities," a GIC spokeswoman said in an email to Reuters on
The sovereign fund had reduced its stake in Citi to under 5
percent in 2009 from over 9 percent but didn't disclose
Reuters data on Monday showed GIC was not listed as among
the top 50 Citi shareholders
UBS, the world's biggest wealth manager, said separately on
Monday GIC intended to place up to 93 million existing shares in
UBS Group through a sale to institutional investors.
GIC, owned by the government of Singapore, was one of the
first sovereign funds to pump billions into Western banks, which
were rocked by the financial crisis and suffered deep losses.
Singapore took a 9 percent stake in UBS in 2007 via an
emergency capital injection when UBS unveiled $10 billion worth
of subprime writedowns. UBS said at that time that GIC would
invest 11 billion francs.
The sovereign fund converted its 11 billion franc investment
in UBS notes into shares in 2010.
Lee Kuan Yew, Singapore's first prime minister, who ruled
the city-state for three decades and was formerly the chairman
of GIC, said in 2009 that the sovereign fund had invested "too
early" in global banks such as Citigroup and UBS. Lee died in
UBS's website listing of major shareholders said that
Singapore as the owner of GIC had held a stake of 7.07 percent
as of December 2014.
GIC Private Limited and its associates have agreed to a
90-day lockup period for the remaining UBS shares, UBS said.
UBS Investment Bank acted as placement agent on the sale.
($1 = 0.9947 Swiss francs)
(Additional reporting by Koh Gui Qui in New York and Rupert
Pretterklieber and Oliver Hirt in Zurich; Editing by Steve
Orlofsky, Simon Cameron-Moore and Mark Potter)