Fosun’s debt-fuelled shopping spree worries analysts
Debt-fuelled HK$20 billion spending spree triggers warnings, but no new downgrade
A HK$20 billion overseas spending spree by China's biggest privately owned conglomerate, Fosun International, is raising red flags among analysts.
Rating agency Moody's has expressed concern that the huge debt that has been financing its overseas deals is hurting the Hong Kong-listed firm's financial strength.
"We are cautious about Fosun's future prospects following large acquisitions like its €1 billion (HK$10.4 billion) deal to buy three Portuguese state insurers in May," said Hu Kai, a senior credit officer at Moody's.
In May, Fosun completed its €1 billion acquisition of 80 per cent of three Portuguese state-owned insurers, Fidelidade-Companhia de Seguros, Multicare-Seguros de Saude and Cares-Companhia de Seguros, beating an offer from Apollo Global Investment of the US.
The Shanghai-based investment firm has since made five more investments, mostly overseas. Its latest deal came on Monday, when it beat a competing merger proposition from Australian-listed oil firm Horizon Oil to fully acquire another Australian-listed oil company, Roc Oil, for A$489 million (HK$3.53 billion).
In March, Fosun was part of a consortium that acquired German private bank BHF Bank for €354 million, of which €98.5 million came from Fosun. Moody's said yesterday that Fosun's acquisition of Roc Oil had no immediate impact on its Ba3 credit rating, three notches below investment grade. But Moody's did not change the negative outlook for Fosun.