Charoen Pokphand (CP) Group, the conglomerate controlled by Thailand's richest man, Dhanin Chearavanont, yesterday said it completed the purchase of a stake in Ping An, China's second-largest life insurer.
The statement said the group's wholly owned subsidiaries received regulatory approval from the China Insurance Regulatory Commission to purchase Ping An Insurance's shares from HSBC Insurance Holdings Ltd and Hong Kong Shanghai Banking Corporation Ltd (HSBC Asia Pacific). In accordance with the terms of the transaction and purchase agreement, the CP Group paid the full purchase price to HSBC.
The green light from the commission came just hours before a deadline for approval and followed media reports that the deal might collapse.
HSBC agreed last Dec 5 to sell its 15.6% holding in Ping An to four subsidiaries of the CP Group in two phases for US$9.4 billion. The first stage, comprising shares valued at US$1.93 billion, was completed on Dec 7. The second required the approval of the commission by the end of yesterday.
Speculation that the sale may be rejected mounted following reports the China Development Bank withdrew loans and the CP Group received funding from businessman Xiao Jianhua.
Failure of the deal, which should generate US$2.6 billion in profit for HSBC, would have been a setback for chief executive Stuart Gulliver as he seeks to revive earnings.
The CP Group had a strong motivation to make the deal happen, as the purchase price was much lower than the current market price.
In a separate statement to the Shanghai Stock Exchange yesterday, Ping An said the commission permitted the transfer of 976.1 million Hong Kong-traded shares to the CP Group.
The sale will generate a US$2.6-billion profit for the London-based HSBC as Mr Gulliver sells assets and cuts jobs to revive earnings.
Olive Xia, a Shanghai-based analyst at Core Pacific-Yamaichi International Ltd, recommends buying shares of Ping An as the uncertainty is removed.
"We still prefer Ping An among Chinese insurers, and the stock has some upside," she said.
Shares in Ping An have gained 23% in Hong Kong trading since last Dec 4, the day before the sale was announced. That is 20% more than the HK$59-a-share the CP Group agreed to pay.
HSBC, which has gained almost 12% in the same time frame, fell 0.3% to close at HK$88 yesterday. The stock has advanced 13% in London since Dec 4.
Mr Dhanin, 73, plans to make a foray into financial services after spending more than four decades building a family seed business into Thailand's biggest agricultural company and conglomerate.
His net worth was estimated at US$6.6 billion by the Bloomberg Billionaires Index, with 60% of the fortune from private international companies.
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