Ping An deal has Beijing connection
HSBC to sell its 15.6 per cent stake in life insurer to CP Group, run by a Thai-Chinese family with close ties to some of the nation's leaders
HSBC's exit from its long-time investment in Ping An Insurance - China's No 2 life insurer - may not be a surprise to the market, but the buyer is big news.
The purchase price was about US$9.4 billion, or at HK$59 a share, a 2.3 per cent premium to Tuesday's market close. Analysts said the price Charoen Pokphand Group, also known as CP Group, agreed to pay was higher than expected and seen as surprising amid concern about the mainland's weakening economy.
For Hong Kong- and Shanghai-listed Ping An, having a new major shareholder pay such a high price for the stake should buoy its share price, at least in the short term.
"We see limited implication on Ping An's operation as HSBC Holdings has not been actively involved in managing Ping An, while the confirmation of the stake disposal should remove a near-term overhang," said JPMorgan analyst Bao Ling Chan.
For HSBC, which already has its own insurance business on the mainland, the deal will allow it to book a net gain of about US$2.6 billion if the deal is completed, HSBC said. It has held the stake since 2004.