What the failed HK$7.1 billion bid for Hong Kong Life says about capital flows in China

The mainland entity behind a proposed HK$7.1 billion bid for Hong Kong Life has missed Sunday’s deadline to proceed with the deal, indicating the push by mainland groups to acquire local life insurance companies has drawn to a close.

The five local major shareholders of Hong Kong Life have terminated the deal “in accordance with the terms of the share sale agreement on the basis that the conditions have not been satisfied by the long stop date [on September 30],” according to separate announcements by Asia Financial Holding and Chong Hing Bank on the Hong Kong stock exchange. The other shareholders are OCBC Wing Hang Bank, Shanghai Commercial Bank and Wing Lung Bank.

“In accordance with the terms of the share sale agreement, an aggregate deposit of HK$710 million (US$90.6 million) paid by the purchaser to the sellers has been forfeited in favour of the sellers,” the announcement said.

Founded in 2001, Hong Kong Life is the 10th largest life insurer in the city and the second largest to be targeted in last year’s merger and acquisition wave.

A consortium known as First Origin was behind the acquisition, first disclosed in March 2017.

UCF Capital, a financial group based in Hong Kong and Beijing, is among the groups making up the bidding consortium, according to sources.