HSBC Holdings PLC’s proposed sale of its stake in Ping An Insurance (Group) Co (中國平安保險集團), China’s second-largest insurer, to Thai billionaire Dhanin Chearavanont for US$7.4 billion has won regulatory approval.
The China Insurance Regulatory Commission gave its permission for the transfer of 976.1 million Hong Kong-traded shares to Dhanin’s Charoen Pokphand Group Co, Ping An said in a statement to the Shanghai exchange yesterday.
The payment for the shares has been made in cash and the transfer will take place by Wednesday, HSBC said in a separate statement.
The approval brings to an end six weeks of speculation that the transaction could collapse because of questions over the financing of the deal. The sale will generate a US$2.6 billion profit for London-based HSBC as chief executive officer Stuart Gulliver sells assets and cuts jobs to revive earnings.
“This is good news as it removes the uncertainty,” Olive Xia (夏平), a Shanghai-based analyst at Core Pacific-Yamaichi International Ltd who recommends investors buy the shares, said by telephone. “We still prefer Ping An among Chinese insurers and the stock has some upside.”
Shares in Ping An have gained 23 percent in Hong Kong trading since Dec. 4, the day before the sale was announced.
That is 20 percent more than the HK$59-a-share that CP Group agreed to pay.
HSBC, which has gained almost 12 percent in the same time- frame, fell 0.3 percent to close at HK$88 yesterday. The stock has advanced about 13 percent in London since Dec. 4.
HSBC agreed on Dec. 5 to sell its 15.6 percent holding in Ping An to four subsidiaries of CP Group in two phases for about US$9.4 billion. The first stage, comprising shares valued at about HK$15 billion (US$1.93 billion), was completed on Dec. 7. The rest required approval from the China Insurance Regulatory Commission by the end of yesterday.
The acquisition of four-fifths of the shares would be funded with cash as well as a financing agreement from the Hong Kong unit of China Development Bank Corp, a policy lender based in Beijing, HSBC had said in December.
Dhanin, 73, planned 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 an estimated US$6.6 billion as of yesterday, according to the Bloomberg Billionaires Index.
Almost 60 percent of the fortune is from overseas private companies.
The group’s historical ties to China include becoming the first foreign investor after former Chinese leader Deng Xiaoping (鄧小平) opened the economy in 1979, and continued management of local agricultural projects.
CP said it could help develop rural areas in China through its investment in Ping An.