China’s insurance regulator is set to reject Charoen Pokphand Group’s proposed $9.4 billion purchase of HSBC Holding Plc (5)’s stake in Ping An Insurance Group Co. (2318) on concerns the group may not be able to fund the acquisition, the South China Morning Post reported.
The China Insurance Regulatory Commission has doubts CP Group can afford the purchase and is “increasingly concerned” about whether the Thai company is the real buyer, the Hong Kong- based newspaper said today, citing unidentified people close to the CIRC.
Charoen Pokphand should “do more to explain where and how it will get the money” for the purchase, especially if the government-owned China Development Bank, or CDB, isn’t providing the funding, the Post said, citing one of the people. The deadline for the CIRC’s approval is Feb. 1, the Post said.
Ping An’s Shenzhen-based spokesman Sheng Ruisheng didn’t answer a call to his mobile phone, while calls to Charoen Pokphand’s corporate communications department went unanswered before office hours. Gareth Hewett, a spokesman for HSBC in Hong Kong, declined to comment.
Ping An fell by the most in more than five months in Hong Kong trading yesterday, dropping 4 percent to HK$68.15, after a media report said the CDB halted loans for Charoen Pokphand’s purchase. The company’s American depositary receipts fell (PNGAY:US) 4.6 percent to $17.31 in U.S. over-the-counter trading yesterday. Each ADR represents two common shares.
HSBC, Europe’s biggest bank by market value, said Dec. 5 it agreed to sell its 15.6 percent stake in Ping An to Thai billionaire Dhanin Chearavanont as it moves to revive profit and boost capital. Caixin reported last month that about two-thirds of the first payment of the deal came from Chinese investors and that Ping An’s management may have helped finance the Chinese backers, which both the insurer and Charoen Pokphand denied at the time.
CIRC Vice Chairman Chen Wenhui said he wasn’t happy with “how the game was played,” in reference to the deal, the South China Morning Post reported today, citing one of the people close to the regulator.
CDB, a policy lender, halted the loans after issuing a risk warning in December and notified the CIRC, Caixin reported yesterday. The Post had a similar story yesterday.
The deal is “in normal approval process,” Ping An’s Sheng said in an e-mailed statement yesterday, without elaborating, in response to an inquiry about the story on CDB’s withdrawal of funding. Sheng earlier called Caixin’s report last month “irresponsible.”
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