CP Group to set up company to handle Ping An acquisition
Charoen Pokphand Group will set up a new company to facilitate its recent acquisition of a stake in China's Ping An Insurance (Group) and comply with regulations regarding Hong Kong-listed insurers.
In addition, there will be only small changes in Ping An’s management. CP Group will participate in executive management and sit on the executive board.
CP Group says having a stake in the insurance business will support its other businesses in China, which include retail, property, automobiles, pharmaceuticals and agriculture, worth more than Bt100 billion.
A source at CP Group said it had hoped to issue a statement yesterday outlining its new investment plan to the public. However, it could not do so because of restrictions imposed by the Hong Kong Stock Exchange and Chinese |law.
HSBC Holdings, Europe’s biggest bank by market value, said in a statement on Wednesday that it had agreed to sell its 15.57-per-cent stake in Ping An to CP Group for US$9.4 billion (Bt288 billion), equivalent to 59 Hong Kong dollars a share.
Charoen Pokphand is buying the shares through three indirect wholly owned units, HSBC said.
Shenzhen-based Ping An, the world’s third-largest insurer by market value, also has banking, securities and money management operations.
China’s insurance market has expanded by an average of 19 per cent a year in the past decade to become the world’s sixth-biggest, while insurers’ assets jumped tenfold, according to the China Insurance Regulatory Commission.
CP Group chairman Dhanin Chearavanont has agreed to purchase HSBC’s stake in Ping An in two phases, with the first to be completed by today.
CP says on its website that it was the first major foreign investor in China in 1979 after the late leader Deng Xiaoping started free-market reforms.
Dhanin’s investment in China’s second-largest insurer marks a departure for Thai companies, which have traditionally viewed China as an export market, according to Credit Suisse Group AG. Before this deal, his only insurance asset was a joint venture in Thailand with Germany’s Allianz AG.
Both CP Group and Charoen are using Asian lenders to fund part of their deals. CP Group will tap state-owned China Development Bank Corp, according to HSBC.
