Fosun takes a leaf out of Warren Buffett’s book
Fosun International is looking to emulate Warren Buffett and use cheap cash for investments, as seen with its acquisition of a Portuguese insurer
Starting from humble beginnings and building up a portfolio of businesses ranging from real estate and consumer products to insurance over the last 22 years, Fosun International is setting its sights on a new growth target: chasing Warren Buffett.
"After acquiring insurance companies in Portugal in February this year, Fosun has taken a big step towards implementing the Warren Buffett model of development," said Fosun chief executive Liang Xinjun.
Fosun has [moved] towards … the Warren Buffett model of development
Insurance companies receive a steady flow of premium income and hold the money until it is finally paid out. Meanwhile, investment returns pile up, Liang told the South China Morning Post.
Fosun bought 80 per cent of Portuguese bank Caixa Geral de Depositos' insurance unit for €1 billion (HK$10.7 billion) in February, beating out US buyout firm Apollo Management International.
The business is the largest insurance group in Portugal. Its unaudited insurance assets hit €12.8 billion at the end of last year. The deal is expected to be completed in the first half of this year.
Liang said the transaction has increased Fosun's insurance assets, and the Chinese conglomerate would continue to identify opportunities to expand or acquire insurance assets with a strong premium float, a term coined by Buffett in 1997 meaning the money an insurance firm holds but does not own.
Fosun Group was founded by four graduates of Shanghai's Fudan University, including Liang and Fosun International chairman Guo Guangchang, in 1992.