As the markets have been tanking globally, Singapore sovereign wealth fund Temasek Holdings Pte. Ltd. has reportedly been bargainhunting. Temasek has increased its stake in Merrill Lynch & Co. to 13.7% from 9.4%, TheDeal.com reports, quoting a US regulatory filing.
Interestingly, the shares of Merrill Lynch had fallen 19% to $22.00 on Monday. Temasek seems to be more than convinced about the potential of Merrill despite the crisis on Wall Street. Merrill Lynch had last month agreed to sell to Bank of America for $50 billion or $29 a share in an all stock deal.
Temasek is already Merrill’s largest shareholder. It also had received regulatory approval to increase its shareholding in Merrill, the report say. There is a limit of 9.9% limit for foreign investors.
Temasek invested $5 billion into Merrill at $48 a share between December and February. However a subsequent resetting of payment for losses on the original investment and additional $900 million poured in last month helped Temasek averaging out its cost of acquiring Merrill to only $23.11 a share.
Now it remains to be seen how the integration of Bank of America with Merrill will take both the entities forward. Bank of America shares are trading at $30.25.