HSBC Insurance Holdings Limited, a wholly-owned subsidiary of the HSBC Group, has entered into agreements, subject to conditions, to acquire an additional 9.91% of the issued share capital of Ping An Insurance (Group) Company of China, Ltd for HK$8,104mn (US$1.039bn).
The shares are to be acquired from two of the current shareholders of Ping An, namely, Goldman Sachs and MSCP/PA Holding, an entity controlled by funds managed by the private equity business of Morgan Stanley. The vendors acquired the Ping An shares in 1994.
Under the terms of the agreements, 613,929,279 Ping An shares will be acquired by HSBC at HK$13.20 (US$1.69) a share, a premium of 9% to the price at which Ping An shares closed on the Hong Kong Stock Exchange on May 6, 2005. Completion of the transaction will bring HSBC’s holding in Ping An to 19.90% of its issued share capital.
The transactions are subject to certain conditions including obtaining approval from the China Insurance Regulatory Commission and other approvals as required by PRC regulators. HSBC intends to satisfy the consideration for the shares out of internal resources.
HSBC Holdings plc group chairman, Sir John Bond, says: “This year marks the 140th year of HSBC’s continuous presence in mainland China and our proposed additional investment in Ping An Insurance demonstrates the confidence HSBC has in the future of the country. We are optimistic about the long-term prospects of the insurance industry in mainland China and believe Ping An is well positioned to benefit from the sector’s development. We are looking forward to developing our partnership with Ping An and working more closely with them in the future.”