Fosun Group

Fosun shrugs off debt concerns as it looks for more overseas acquisitions

Shanghai conglomerate shrugs off concerns over debt accumulated in buying spree of overseas assets that it will bring into mainland market

PUBLISHED : Friday, 22 August, 2014, 9:28am
UPDATED : Saturday, 23 August, 2014, 1:29am

Fosun International is determined to stay on the hunt for acquisitions, brushing off ratings agency concerns that debt-fuelled overseas investments are hurting the conglomerate's financial health.

"We are going to invest in 20 to 30 per cent stakes in international companies and help revitalise their global franchises by connecting them to the China market," said Patrick Zhong Lei, the company's head of global investment and strategies. "We will bring most of the foreign companies we invest in into the China market.

"Multinationals have difficulties in coming to China, we will help them develop here."

In May, Moody's Investors Service warned it might downgrade Fosun if it continued its overseas shopping spree.

"Don't worry about us having no money. We have enough," Zhong told the South China Morning Post.

Fosun has spent more than HK$22 billion on overseas investments this year, including €1 billion (HK$10.3 billion) to acquire majority stakes in three Portuguese state-owned insurance firms.

Zhong declined to comment on reports that Fosun was seeking to buy US insurer Aurora National Life Insurance for up to US$500 million from Swiss Re.

Fosun's most recent overseas acquisition was a 20 per cent stake in US insurer Ironshore for US$468.83 million, which was announced on Monday.

Another Shanghainese company, Jinjiang International, is also on a global shopping spree.

The mainland's largest hotel management company was in talks to acquire "a European company that owns thousands of hotels", said Wang Jie, a vice-president and general counsel of the state-owned firm.

"Money is not a concern. The challenge is getting human talent," Wang said.

He declined to say whether Hong Kong-listed subsidiary Shanghai Jin Jiang International Hotels (Group), would take part in the acquisition of the European firm if the deal goes through.

"Jinjiang buys overseas hotels to learn from them and spread our brand abroad," Wang said. "We bring the overseas brands we buy to China."

The Hong Kong subsidiary teamed up with US real estate investment firm Thayer Lodging to acquire Interstate Hotels & Resorts, the largest independent US hotel management firm, in 2010 in a transaction valued at US$307 million.

Interstate China Hotels & Resorts, a joint venture between Interstate Hotels and Jin Jiang International, is to manage J-Hotel, due to open next year on the 88th to 120th floors of Shanghai Tower.