China’s Fosun sells stake in Belgian insurer Ageas to BNP Paribas

Posted by Admin April 15, 2024 Bussiness

Fosun International, one of China’s largest private-sector conglomerates, has agreed to sell an 8.2 per cent stake in Belgian insurer Ageas to BNP Paribas for about €670 million (US$714 million) as part of an effort to reduce its debt amid economic turbulence.

A deal involving the sale of 15.4 million shares of Ageas was concluded on Friday, the Shanghai-based group said in a filing to the Hong Kong stock exchange.

“The disposal is part of the company’s efforts [towards] streamlining its portfolio and implementing a core business-focused strategy,” Fosun said in the filing published on Sunday evening. “It also demonstrates the group’s continuous determination on improving its financial performance and creating maximum value for its shareholders.”

Fosun, controlled by Chinese billionaire Guo Guangchang, will still hold 1.95 million shares, or 1 per cent, of the Belgian insurer after the transaction, the company added.

A BNP Paribas logo is seen at a bank in Paris in 2018. Photo: Reuters

The divestment came just two weeks after Fosun pledged to hasten its exit from noncore businesses while focusing on assets that generate cash flow to improve its profitability.

The conglomerate, which is involved in a wide range of industries including tourism, pharmaceuticals, real estate and financial services, aims to cut its debts by 10 billion yuan (US$1.38 billion) annually in the next two to three years, co-chairman Wang Qunbin said during an earnings briefing on March 28.

Fosun reduced its interest-bearing debts, such as bank loans and corporate bonds, by 15 billion yuan to 211.9 billion yuan in 2023, the company said.

Chinese conglomerate Fosun dumps noncore assets, deleverages to boost financial profile

“More divestment deals will surface after Fosun’s sale of the European insurer’s stake,” said Ding Haifeng, a consultant at Shanghai-based financial advisory firm Integrity. “The market expects Fosun to sell down stakes in some of its tourism assets as it pursues an asset-light strategy.”

Fosun Tourism Group, Fosun International’s leisure and tourism unit, is courting both domestic and international investors. The group, which owns popular resort chain operator Club Med, announced in mid-March it was open to strategic investment as it embarked on the asset-light strategy.

Investors who “share the same values and agree upon the company’s strategy” are welcome to acquire stakes in all units, Xu Xiaoliang, Fosun Tourism’s chairman, said during a media briefing on Friday.

Fosun unit courts investors days after reports of debt woes at parent firm

China’s economy expanded by 5.2 per cent last year, the slowest annual rate since 1990, excluding the pandemic years. The World Bank has projected the country’s gross domestic product growth will slow to 4.5 per cent in 2024 and 4.3 per cent in 2025.

Fosun International posted a net profit of 1.38 billion yuan for 2023, turning around from a net loss of 831.8 million yuan a year earlier. Its revenue grew 8.6 per cent to 198.2 billion yuan.

Ageas and BNP Paribas are long-time partners in AG Insurance, an insurer in Belgium. Ageas owns 75 per cent of the venture and BNP holds the remaining 25 per cent.