CP financing of Ping An doubted

Fresh doubts were raised by Hong Kong media on Monday about the ability of Charoen Pokphand Group to pay for its plan to buy a large stake in Ping An Insurance.

The reports said the China Insurance Regulatory Commission (CIRC) was looking into a sudden and unexplained increase in the registered capital of the four CP subsidiaries which the company has said will pay the US$9.4 billion for the Ping An stake.

According to the unsourced Hong Kong reports, the CIRC was concerned that the registered capital increased  52,000 times in less than a month.

On Dec 7, a Hong Kong stock exchange filing from Ping An showed the combined registered capital of the four units at US$200,000, The Standard newspaper reported on Monday. "But the figure jumped to US$10.5 billion in a separate filing posted at the end of December," The Standard reported.

The Caixin media said all four CP units are registered in the British Virgin Islands, and the Chinese regulators may not recognise their accounting standards.

China Development Bank, which had agreed to help finance the purchase by Thai billionaire Dhanin Chearavanont’s CP Group, canceled its loans, China’s Caixin Online reported Jan. 8.

CIRC concern over payment problems were reported last week, but CP issued a statement saying it had the cash available to buy the 15.6 per cent stake in Ping An Insurance.

"The transaction is still under consideration by the China Insurance Regulatory Commission and we confirm that if approval is received from the CIRC, the CP Group has the necessary resources," the firm's spokeswoman said

Media press reports from China also claimed that the CIRC was concerned that CP was acting as a front man or nominee for some mysterious buyer behind the scenes. CP flatly denied that report.

Earlier, CP said China Development Bank was arranging a loan worth HK$44 billion for the acquisition. But the loan reportedly stalled.

The Standard

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