Chinese insurer acquires 4.2% in Fortis for $2.7 bn
China’s state-owned companies spent almost $17 billion on overseas financial purchases in 2007, buying stakes in Barclays, Bear Stearns, Blackstone Group and Standard Bank Group.
By Agencies |
BEIJING: Ping An Insurance (Group) bought a 4.2% stake in Fortis, Belgium’s biggest financial-services company, for e1.81 billion ($2.7 billion) in the largest overseas acquisition by a Chinese insurer. Fortis rose the most in four-and-half years in Brussels trading on the purchase, which makes Ping An its biggest investor.
China’s state-owned companies spent almost $17 billion on overseas financial purchases in 2007, buying stakes in Barclays, Bear Stearns, Blackstone Group and Standard Bank Group.
“Chinese financial companies are looking for growth through acquisitions outside their core market,” said Leslie Phang, who helps oversee $1 billion at Commonwealth Private Bank in Singapore. “These are certainly very attractive investments from both a return and a diversification standpoint.”
Ping An, China’s second-biggest insurance company, bought the shares on the Brussels and Amsterdam stock exchanges, it said in a statement on Thursday. Fortis, part of the group that acquired ABN Amro Holding, trades at about 6.4 times reported earnings, making it the second-cheapest company among Europe’s 20 largest banks and insurers after Deutsche Bank AG, data compiled by Bloomberg show.
Fortis shares climbed as much as 7.3%, and were up 52 cents, or 2.9%, to 18.69 euros by 10:27 am, valuing the company at e41.1 billion. The stock is down 31% this year after credit losses and damage claims damped profit.
Fortis, with headquarters in Brussels and the Dutch city of Utrecht, asked Ping An President Louis Cheung to join the board.
Ping An, in which HSBC Holdings holds a 17% stake, climbed 5.2% to HK$83.20 in Hong Kong, and 7.5% to 109.98 yuan in Shanghai. Fortis, in a statement, said Ping An’s investment “allows it to gain access to high-growth markets, in particular China.”
Ping An bought 95.01 million Fortis shares on Euronext Brussels and Euronext Amsterdam as of November 27, it said in a release to the Hong Kong stock exchange.
“The deal will realise valuable benefits because of Fortis’ and Ping An’s shared business model of an integrated banking and insurance platform,” said Ping An chairman Peter Ma in the statement. “Ping An will benefit from Fortis’ expertise in cross selling, risk management and innovation in product design.”
Ping An is seeking to diversify by assembling a one-stop financial supermarket that will get two-thirds of its revenue from banking, securities and asset management.
China’s state-owned companies spent almost $17 billion on overseas financial purchases in 2007, buying stakes in Barclays, Bear Stearns, Blackstone Group and Standard Bank Group.
“Chinese financial companies are looking for growth through acquisitions outside their core market,” said Leslie Phang, who helps oversee $1 billion at Commonwealth Private Bank in Singapore. “These are certainly very attractive investments from both a return and a diversification standpoint.”
Ping An, China’s second-biggest insurance company, bought the shares on the Brussels and Amsterdam stock exchanges, it said in a statement on Thursday. Fortis, part of the group that acquired ABN Amro Holding, trades at about 6.4 times reported earnings, making it the second-cheapest company among Europe’s 20 largest banks and insurers after Deutsche Bank AG, data compiled by Bloomberg show.
Fortis shares climbed as much as 7.3%, and were up 52 cents, or 2.9%, to 18.69 euros by 10:27 am, valuing the company at e41.1 billion. The stock is down 31% this year after credit losses and damage claims damped profit.
Fortis, with headquarters in Brussels and the Dutch city of Utrecht, asked Ping An President Louis Cheung to join the board.
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The market value of Ping An, located in the southern Chinese city of Shenzhen, stands at $98.6 billion. The rally in China’s shares, the world’s best-performing stock market, turned Beijing-based PetroChina into the world’s biggest company by market capitalisation and made Industrial & Commercial Bank of China the largest bank. Ping An, in which HSBC Holdings holds a 17% stake, climbed 5.2% to HK$83.20 in Hong Kong, and 7.5% to 109.98 yuan in Shanghai. Fortis, in a statement, said Ping An’s investment “allows it to gain access to high-growth markets, in particular China.”
Ping An bought 95.01 million Fortis shares on Euronext Brussels and Euronext Amsterdam as of November 27, it said in a release to the Hong Kong stock exchange.
“The deal will realise valuable benefits because of Fortis’ and Ping An’s shared business model of an integrated banking and insurance platform,” said Ping An chairman Peter Ma in the statement. “Ping An will benefit from Fortis’ expertise in cross selling, risk management and innovation in product design.”
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Fortis’ third-quarter earnings from banking stood at e587 million, while profit from insurance was e294 million. Ping An is seeking to diversify by assembling a one-stop financial supermarket that will get two-thirds of its revenue from banking, securities and asset management.
In March, Ping An and larger rival China Life Insurance paid a combined 10.8 billion yuan ($1.4 billion) for about 10% of China Minsheng Banking, the nation’s only privately-controlled bank. Ping An bought 89% of Shenzhen Commercial Bank last year, and HSBC, Europe’s biggest lender, said in February that Ping An was buying its 27% stake in Ping An Bank.
China will remain the key focus for Ping An’s investments even as it seeks acquisitions abroad, Cheung said on June 1.
“Chinese companies have the money to invest, but they cannot be seen to play an influential role in acquisitions,” said Mark Tan, a portfolio manager at UOB Asset Management in Singapore, which owns shares of Ping An and China Life. Ping An “kept the purchase to below 5% as they’re sensitive to the political ramifications of taking too large a stake.”
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