The Malaysian Insider :: Breaking Views
The Malaysian Insider :: Breaking Views |
| China approves HSBC sale of remaining US$7.4b Ping An stake Posted: 01 Feb 2013 08:36 AM PST HONG KONG, Feb 1 — China has approved the sale of HSBC's remaining US$7.4 billion (RM23 billion) stake in Ping An Insurance to a group controlled by Thailand's richest man, allowing completion of the biggest equity purchase in the country by a foreign investor. For HSBC Holdings Plc, the sale marks its exit from a decade-long interest in China's second-biggest insurer and books it a US$2.6 billion post-tax gain from selling what it no longer considers a core asset. Approval by the China Insurance Regulatory Commission (CIRC) had been in doubt after media reports last month raised questions over Thai conglomerate CP Group's funding for the deal. State-run China Development Bank (CDB) did not provide finance for the purchase, despite being lined up for funding last month, people familiar with the matter told Reuters. One of the sources, who is familiar with CP Group but not authorised to speak publicly, said the CDB credit facility was still in place but CP is not drawing it down as it became such a politically sensitive issue, and it could complete the deal without it. Charoen Pokphand Group (CP Group), controlled by septuagenarian billionaire Dhanin Chearavanont, bought HSBC's 15.6 per cent stake in Ping An in December for US$9.4 billion, agreeing to pay up front for around a fifth of that stake last month, and the rest, backed by CDB, on approval by the Chinese regulator. Payment for the second US$7.4 billion tranche of shares was made in cash, HSBC and CP Group said in separate statements. Last month HSBC had said the second tranche would be financed in part in cash and in part under a facility with CDB. The first payment was supposed to be funded by wholly-owned CP subsidiaries, but local media reports said people not directly tied to the Thai food conglomerate were behind the deal, prompting CDB to voice its concerns. The bank would likely not want to anger Beijing by being involved in facilitating a non-mainland investment in Chinese stocks. "If, after all this news, CIRC approved the deal, it indicates (the regulator) is comfortable that CP will be the holder. This will remove the overhang on the Ping An share price," said Edmond Law, a China insurance analyst at UOB Kay Hian. The Thai group has interests spanning poultry and animal feed, supermarkets and auto making, and has a long history in China as the first multinational to invest in the country's agri-business in 1979. It was later tasked with helping to modernise China's farm sector. The Ping An deal was Asia's second-biggest acquisition in 2012, behind Chinese oil firm CNOOC Ltd's planned US$15.1 billion purchase of Canada's Nexen Inc. Founded in 1988 as China's first joint-stock insurer, Ping An has grown into one of the world's largest, with 74 million clients, more than 175,000 employees and an army of some 500,000 agents. NON-CORE The sale is part of HSBC's strategy of selling non-core assets and shrinking in many markets to improve profitability. But some people were worried that Europe's biggest bank will lose about US$1 billion in earnings contribution that it may struggle to replace. "I understand strategically why they are doing it, but it will be dilutive to returns," said Ian Gordon, analyst at Investec Securities in London. "HSBC is short of earnings and long of capital and after this deal its emerging capital surplus — for which it has no avenues to deploy it - becomes even more pronounced," he said. The capital boost from the sale should underpin dividend prospects, however, and offer greater flexibility as regulators in Europe act tougher on banks' capital requirements. By 1147 GMT HSBC's London shares were down 0.3 per cent, in line with a slightly weaker European banking index. Before the Ping An sale, HSBC had already sold about US$6.7 billion worth of assets, according to Thomson Reuters data, including non-life insurance operations and retail banking branches in places such as Thailand and the United States. HSBC sold the Ping An stake for HKUS$59 (RM24) per share, for a total of HKUS$72.74 billion. The deal, given its size, was an important and sensitive sale for HSBC, and was personally overseen by CEO Stuart Gulliver, said a person with direct knowledge of the matter. HSBC, which spent US$1.7 billion building its Ping An stake between 2002-05, also has a 19.9 per cent interest in Bank of Communications, China's fifth-largest lender, and owns 8 per cent of unlisted Bank of Shanghai and 62 per cent of Hong Kong's Hang Seng Bank, which in turn owns 13 per cent of China's Industrial Bank. — Reuters |
| Ong brothers raise 2nd largest Asia-based private equity fund Posted: 01 Feb 2013 08:32 AM PST
The firm — run by Malaysia-born Richard Ong, formerly of Goldman Sachs Group Inc, and Charles Ong, who worked for Temasek Holdings Pvt Ltd and Lazard — is expected to finalise the fund in early March, after setting out to raise US$5 billion, the source said. The firm has invested in US energy companies FTS International and Cheniere Energy Inc, and China biotech firm Triplex Biosciences Company Ltd. Among Asia Pacific-based private equity funds, the fund is second only to the US$4.1 billion raised by Australia's Pacific Equity Partners in 2008, according to data provider Preqin. Asia Pacific private equity fundraising stumbled in the second half of 2012, falling 50 per cent year-on-year to US$18.9 billion raised, according to recent figures from Asian Venture Capital Journal (AVCJ). Investors in private equity in Asia have tightened their purse strings, disappointed with returns from the last batch of funds they seeded in the region in 2006 and 2007. The second half fundraising figures, according to AVCJ, are the lowest six-month figures since 2009, when the global financial crisis put a dent in fundraising around the world. Reuters recently reported that global buyouts fund KKR & Co LP was oversubscribed on its regional fund for US$6 billion, the largest amount ever raised for an Asia-focused fund, according to Preqin data, although Pacific Equity Partners and RRJ are the top fundraisers among Asia Pacific-based partnerships. RRJ Capital, founded by Richard Ong, raised its first fund of US$2.3 billion in 2011 and has rapidly invested most of that money. The firm recently acquired around 70 per cent of Hong Kong-based Kingkow, a privately held children's clothing retailer, for an undisclosed amount. Shortly before that, it invested US$150 million in the rights issue of Singapore commodity firm Olam International Limited, the source said. Other deals include US$468 million invested in Cheniere Energy together with Singapore state investor Temasek, to help the US energy firm fund the United States' first liquefied natural gas export plant. The firm also invested US$50 million last year in Triplex, a company that makes kits to test for hepatitis, cervical and lung cancer, and other diseases. — Reuters |
HONG KONG, Feb 1 — RRJ Capital, a Hong Kong firm led by prominent Asia dealmakers the Ong brothers, has raised US$3.5 billion (RM11 billion) for its second fund, a source with knowledge of the matter told Reuters, making it the second-largest Asia Pacific-based private equity fund ever raised.| You are subscribed to email updates from The Malaysian Insider :: ALL To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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