Fosun Group

Chinese conglomerate Fosun eyes take over of Ageas, Belgium’s largest life insurance provider

Shanghai-based company already owns 3pc stake in insurer with a market cap of US$11 billion

PUBLISHED : Wednesday, 25 July, 2018, 7:23pm
UPDATED : Wednesday, 25 July, 2018, 10:09pm

Chinese conglomerate Fosun International, one of the country’s biggest buyers of assets and companies globally, plans to extend its presence in Belgium with the takeover of Ageas, its biggest life insurance provider.

The Shanghai-based company is in discussions with the financial advisers of Brussels-based Ageas, which has a market capitalisation of 9.4 billion (US$11 billion). Fosun already holds about 3 per cent of Ageas stock, while Ping An Insurance (Group) Company, another mainland conglomerate, is its largest shareholder with a 5 per cent stake.

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“We have had an initial discussion. But the talks are not yet at a stage where we can approach the insurer’s management,” said a source familiar with the matter. “Fosun prefers to take a controlling stake if the deal goes ahead.

“But Ageas’ share price rose after the news was leaked, and this could deter Fosun’s investment desire,” said the source. Fosun declined to comment on the matter.

Vikram Gandhi, a research analyst at French banking group Société Générale, however, said: “We value Ageas at 47 per share versus 43.66 per share, the close on Tuesday. An upside of 7.65 per cent.

“I wouldn’t call Ageas as being overvalued based on yesterday’s share price. But it remains to be seen as to how much premium Fosun is willing to pay on Ageas’s undisturbed share price.”

Based on yesterday’s close, Ageas’ price-earnings ratio is 9.5 times on the basis of an estimate for 2020, and 9.1 times for its European composite peers, said Gandhi. On Wednesday evening in Hong Kong, the company’s shares were trading at 45.75.

Ageas is a listed international insurance group with a history spanning 190 years. It is the no. 1 player in the life insurance market and No. 2 in non-life insurance in Belgium. About one out of every two Belgian households is its customer, according to the company’s website.

In 2016, Ageas completed the purchase of AXA’s Portugal operations for 189 million, a deal that positioned it as the country’s second-largest insurer by premiums.

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Fosun has also built up a strong base in Portugal. In 2014, it acquired Fidelidade Cia de Seguros SA, the country’s largest insurer, in a deal worth 1.04 billion. It followed up on this with the purchase of hospital operator Espirito Santo Saude SGPS SA the same year, capping off its acquisition spree with the purchase of Banco Comercial Portugues SA in November 2016 for €174.6 million.

Shares in Fosun closed higher on Wednesday, up by 1.67 per cent at HK$14.64, after hitting a intraday high of HK$14.66. The conglomerate, among Chinese four biggest private companies, has continued with its overseas acquisitions despite a crackdown by Beijing on firms acquiring overseas assets that started last year.

The other three private conglomerates – HNA Group, Dalian Wanda Group and Anbang Insurance Group – have been selling assets.

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Fosun, which also owns luxury brand Lanvin, won approval from the Hong Kong stock exchange this month to spin off its tourism and hotels unit, which will raise about US$500 million.

Fosun Tourism & Culture Group includes a Chinese joint venture with tour operator Thomas Cook Group and a luxury hotel in Hainan province as well as French resort chain Club Med, according to International Financing Review, a Thomson Reuters publication.