Exclusive: HSBC sale of Ping An stake in limbo as state bank backs off loan support

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A woman walks past a Ping An Insurance building in Shanghai December 6, 2012. Photo: Reuters

Published: 12:00am, 8 Jan 2013Updated: 10:42am, 15 Jan 2013

A high-profile, US$9.4 billion bid by a Thai conglomerate to buy HSBC's stake in a leading mainland insurance company appears to be in danger as sources say that China Development Bank (CDB) is reconsidering its decision to back the deal.

People familiar with the situation told the South China Morning Post that talks between Charoen Pokphand (CP Group), and Beijing-based CDB about a loan arrangement to support CP complete the purchase of HSBC's stake in Ping An Insurance had cooled in recent weeks.

This followed media reports about the role of a secretive mainland businessman in the deal.

"You could say the talks have been de facto halted. In fact, no legally binding agreement between CDB and CP has been signed at this moment," said one of the persons, who declined to be identified due to the sensitive nature of the matter.

The development, described by the sources as a big surprise to both CP and HSBC, came after Xiao Jianhua emerged as a behind-the-scenes buyer for the Ping An stake, held by HSBC for more than a decade.

Xiao, who is well connected to many senior Chinese officials and their children, founded and controls the low-profile but immensely powerful Beijing-headquartered Tomorrow Holdings, which has subsidiaries and investments in financial firms on the mainland ranging from banks to securities houses.

Mainland media outlets including the influential Caixin Century Weekly reported late last month that Xiao had borrowed from local mainland banks with which he had long-standing relationships to fund CP's acquisition of the Ping An stake.