Ping An Insurance

Mystery deepens over Ping An buyer

Sources say Xiao Jianhua provided financial muscle to help Charoen Pokphand's bid

PUBLISHED : Monday, 24 December, 2012, 12:00am
UPDATED : Monday, 24 December, 2012, 9:14am

Reports that a secretive mainland businessman with close links to Hong Kong tycoons and mainland officials played a key role in Charoen Pokphand Group's plan to buy HSBC's Ping An stake raise fresh questions about the real buyer and the source of funding for the deal.

HSBC this month said it would exit from China's No 2 life insurer by selling its entire 15.6 per cent Ping An stake for US$9.4 billion to CP, a Thai food exporter with no experience in insurance but well connected to Beijing.

It now turns out that Xiao Jianhua, a mainland businessman born in Shandong who is said to hold a Canadian passport, provided CP with the financial muscle to pull off the deal.

The sale, coming after a report in The New York Times alleged the family of outgoing Premier Wen Jiabao had massive, hidden investments in Ping An, was seen as part of efforts to put the insurer in reliable hands.

"It was important to ensure the new shareholder replacing HSBC wouldn't delve into Ping An's past," said a South China Morning Post source who declined to be identified.

Xiao, who, other sources said, has been spending a lot of time in Hong Kong in recent years, is the founder and owner of Beijing-based Tomorrow Holdings, one of the mainland's leading privately held investment houses.

Mainland magazine Caixin Century Weekly reports today that Xiao borrowed from three local banks to fund CP's acquisition of the Ping An stake. Caixin also reports some of the money CP used to close the deal might have come from the top management level of Ping An itself. Ping An has denied this.

CP Group yesterday said the funding for the deal was legal and that all of the funds came from CP Group, its shareholders and enterprises controlled by its shareholders.

The Post learned from its sources that CP turned to Xiao for part of the funding. Companies directly or indirectly controlled by Xiao's Tomorrow group obliged by borrowing from several small banks, including lenders in Inner Mongolia , Shandong and Zhejiang provinces with whom Xiao has had longstanding relationships.

CP remains the only buyer on record and neither Xiao nor any company related to Xiao has been mentioned in public announcements by HSBC or CP.

The Post's sources said HSBC had informed new Politburo Standing Committee member Wang Qishan last year about its intention to exit Ping An. At the time, state-owned China Citic Group was a front runner for the stake. Wang, who was until recently the top official in charge of financial industry matters, apparently chose not to get involved.