M&A frenzy isn’t over yet

by Insurance Business Wholesale11 Sep 2015
(IBA staff reporters, Bloomberg) – Chinese funded insurance takeovers have been a regular part of the news this year. But the recent PRC stock market rout left many fearing that there might now be at least a pause as companies with ravaged balance sheets paused to think carefully before buying overseas targets. All, however, is not lost if you were hoping for more activity this year -  Fosun International Ltd., Chinese billionaire Guo Guangchang’s conglomerate that has bought insurers and real estate around the world, has just proposed raising HK$11.7 billion ($1.5 billion) in a rights offer to continue to fund its push into the banking and insurance industries.

The company plans to sell as many as 871.3 million new shares at HK$13.42 each, the closing price in Hong Kong on Thursday, according to a Hong Kong stock exchange filing. Holders can buy 56 new shares for every 500 they now own. While Fosun shares have advanced this year, they’re down 38 percent from this year’s high hit on May 4. The shares fell 0.9 percent to HK$13.30 at 9:22 a.m. in Hong Kong.

Fosun will use the money for “general corporate purposes including mergers and acquisitions in the banking and insurance industry and repayment of loans,” according to the filing.

The company has spent $5.7 billion acquiring insurance assets in the past two years, according to data compiled by Bloomberg, as part of a shopping spree spanning Australian energy companies to New York City office buildings. Fosun said in a presentation accompanying its first-half results last month that low interest rates in Europe, the U.S. and Japan would facilitate its acquisitions of insurance companies in the region. Guo on Aug. 31 said that Fosun aims to grow its private banking business to manage more than $100 billion in assets.

In July, Fosun made a hostile $545.5 million offer for BHF Kleinwort Benson Group SA, and agreed to buy German private bank Hauck & Aufhaeuser Privatbankiers KGaA for as much as 210 million euros ($237 million).
Insurance Deals

Insurance-industry deals include the $1.84 billion agreement, announced in May, to buy Bermuda-based insurer Ironshore Inc., and the $433 million acquisition of Southfield, Michigan-based Meadowbrook Insurance Group Inc. it disclosed in December. Fosun also owns a Hong Kong reinsurer and a life- insurance venture in China with Prudential Financial Inc.

Fosun has also submitted a bid for Portugal’s Novo Banco SA, according to a person with knowledge of the sale earlier this month.

Outside of insurance, some of the biggest acquisitions of the owner of French resort operator Club Mediterranee SA and Greek jewelry brand Folli Follie have been in real estate. In July, it said it bought the former Milan headquarters of Italy’s UniCredit SpA in a deal valued by the seller at 345 million euros ($389 million).

The acquisition of the Palazzo Broggi in the center of Italy’s financial capital expanded the company’s global property portfolio. It acquired Lloyds Chambers in London in October 2013 and One Chase Manhattan Plaza in New York a month later. Since then, Fosun has made eight other investments in the U.S., Australia, Hong Kong and Japan, including co-developing a luxury residential tower near New York’s Empire State Building.

©2015 Bloomberg News & IBA
Joshua Fellman