HSBC on Thursday finally responded to the welter of speculation about the planned sale of its $9.4bn stake in Ping An, the Chinese insurer.
And it seemed to dismiss suggestions that the deal might be off because of widely-reported concerns that the Chinese state bank financing the deal might pull out. It said, in short, that it had nothing to add to its December 5 statement announcing the sale. Will this be the last word in this complicated saga?
By Gwen Robinson and Jake Maxwell Watts
Dhanin Chearavanont, the 73-year-old patriarch of the Charoen Pokphand group of companies, told a business gathering in Bangkok some months ago the time was right for Thai companies to go shopping abroad. On Wednesday, Dhanin put his money where his mouth was, sealing a $9.4bn deal to buy HSBC’s entire 15.6 per cent stake in China’s second-largest insurer, Ping An.
HSBC‘s $9.4bn deal to sell its 15.6 per cent stake in Ping An to Thailand’s Charoen Pokphand Group is clearly good news for the British bank. It should also be good news for the Chinese insurer, assuming that Charoen Pokphand follows HSBC’s example in the role of long-term stable foreign shareholder.
Investors in Ping An are betting that it will, with the shares jumping 5.6 per cent in Hong Kong on the news and later closing up 4.1 per cent. HSBC, which made its intentions clear weeks ago, saw its shares rise 1 per cent.
Lean times require mean valuations. And so it is with Chinese state-owned insurer PICC Group, which has cut back the proposed price tag on its Hong Kong IPO from an original estimate of up to $30.5bn to $15.4bn-$18.2bn.
The much-delayed sale would still raise up to $3.6bn in Hong Kong’s biggest offering since AIA (also an insurer) secured $20.5bn in 2010. With cornerstone investors headed by US insurer AIG and Chinese state companies pledging $1.85bn, the deal – at its new price level – finally seems set to reach the market.
Shares in HSBC jumped 1.4 per cent in Hong Kong on Monday after the bank confirmed what investors had long suspected – its $9.5bn stake in Ping An Insurance, China’s second-biggest insurer, is up for sale.
The bank issued a statement after the Hong Kong Economic Journal, a Chinese-language newspaper, reported that Thai billionaire Dhanin Chearavanont, who controls the Charoen Pokphand Group, was among the potential purchasers.
But its not a done deal and shares in Ping An fell 2.7 per cent as investors weighed the consequences of the company losing its prestigious connection with one of the world’s best-known banks.