China’s Fosun International sells stake in Belgian insurer Ageas to BNP Paribas to reduce debt, focus on core businesses
- The company, one of China’s largest private-sector firms, agreed to sell an 8.2 per cent stake in Ageas for about €670 million (US$714 million)
- More divestments to come, analyst says, as conglomerate aims to cut debts by US$1.38 billion annually in the next two to three years
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.
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.
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.”
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.
