Fo­sun, Pru­den­tial get co­zier on in­vest­ment

Part­ner­ship will build on ex­ist­ing joint ven­tures, mov­ing into realty

China Daily (Canada) - - BUSINESS - By HE WEI in Shang­hai hewei@chi­

China’s Fo­sun Group, the par­ent com­pany of ac­quis­i­tive con­glom­er­ate Fo­sun In­ter­na­tional, has an­nounced an agree­ment to forge a China-fo­cused joint ven­ture with US in­surer Pru­den­tial Fi­nan­cial Inc.

The part­ner­ship, which builds on their ex­ist­ing joint ven­ture in life in­sur­ance and in­vest­ment man­age­ment, fol­lows a ma­jor buy­out of a Por­tuguese in­sur­ance firm, as Fo­sun ac­cel­er­ates its in­ter­na­tional de­ploy­ment in 2014.

The two com­pa­nies, which be­gan col­lab­o­ra­tion in 2011, in­tend to in­vest in “mixed-use de­vel­op­ment” prop­erty projects in grow­ing ur­ban cen­ters in China, ac­cord­ing to a com­pany state­ment on Wed­nes­day.

One fo­cus is a com­pound re­tire­ment plat­form with prod­ucts, ser­vices and ed­u­ca­tional re­sources aim­ing to help Chi­nese in­di­vid­u­als and fam­i­lies in re­tire­ment bet­ter cope with chal­lenges, the state­ment said.

The com­pa­nies did not re­veal the size of their in­vest­ment in the ven­ture, say­ing they ex­pect to in­vest in projects through a com­bi­na­tion of in­ter­nal and third-party cap­i­tal. They also ex­pect to col­lab­o­rate on real es­tate projects out­side China.

The Chi­nese con­glom­er­ate and the se­cond-largest US life in­surer run two pri­vate eq­uity funds and have co-in­vested in a 50-50 Shang­hai-based life in­sur­ance joint ven­ture, Pramer­ica Fo­sun Life In­sur­ance Co, which started op­er­a­tions in 2012.

“The growth of China’s ur­ban cen­ters and the ag­ing of our pop­u­la­tion present sig­nif­i­cant op­por­tu­ni­ties for our two com­pa­nies to help ad­dress eco­nomic and de­vel­op­ment is­sues of crit­i­cal im­por­tance to China, draw­ing from our re­spec­tive strengths in real es­tate, in­vest­ment man­age­ment and re­tire­ment,” said Guo Guangchang, chair­man of Fo­sun, in a news re­lease.

Fo­sun’s in­vest­ment abil­ity and deep un­der­stand­ing of the mar­ket in China will con­tinue to en­able Pru­den­tial Fi­nan­cial to achieve its goal of de­vel­op­ing a suc­cess­ful long-term pres­ence in China, said vice-chair of the US in­surer Mark Grier.

The agree­ment was an­nounced on the same day that Fo­sun re­as­sured in­vestors it has enough cash to fund the $1.35 bil­lion pur­chase of the in­sur­ance arm of a Por­tuguese state bank. It said it will con­tinue to buy for­eign as­sets to ex­pand its over­seas reach.

The deal will give Fo­sun 80 per­cent of the eq­uity from the in­sur­ance arm of Caixa Geral de De­pos­i­tos SA of Por­tu­gal, but Fo­sun has yet to dis­close how it plans to fund the pur­chase.

The real es­tate ven­ture is the lat­est move by Fo­sun, which lever­ages in­sur­ance in­vest­ments as a base for fund­ing big­ger projects.

Fo­sun is cur­rently bid­ding to ac­quire French re­sort com­pany Club Mediter­ra­nee SA, af­ter pay­ing $725 mil­lion for One Chase Man­hat­tan Plaza in New York last year. It also ob­tained a 9.5 per­cent stake in Greece’s largest jew­elry re­tailer, Folli Fol­lie, in 2011.

Liang Xin­jun, chief ex­ec­u­tive of­fi­cer of Fo­sun, told China Daily ear­lier the firm is look­ing for in­dus­tries that in which Chi­nese mar­ket share will oc­cupy 20 to 30 per­cent of the global in­dus­try in five to 10 years.

Elder care has be­come a lu­cra­tive busi­ness given that the pro­por­tion of China’s se­nior cit­i­zens is ex­pected to ac­count for 34 per­cent of the coun­try’s to­tal pop­u­la­tion by 2050, ac­cord­ing to sta­tis­tics from the China Na­tional Com­mit­tee on Ag­ing.

In a State Coun­cil guide­line in Septem­ber, the cen­tral govern­ment vowed to pro­mote a “re­tire­ment ser­vices in­dus­try” by set­ting up spe­cial­ized institutes and en­cour­ag­ing for­eign and pri­vate in­vest­ment in these ser­vices.

The sec­tor has gained trac­tion among do­mes­tic and in­ter­na­tional home op­er­a­tors. Chi­nese main­land de­vel­op­ers, in­clud­ing China Vanke Co and Poly Real Es­tate Group, are build­ing se­nior hous­ing projects to tap the mar­ket po­ten­tial.

“This year is likely to wit­ness a string of di­rec­tives on the im­ple­men­ta­tion of elder care. We are likely to ex­pect more com­peti­tors in the ag­ing prop­erty mar­ket,” said Zhu Zhongyi, vice-head of the China Real Es­tate As­so­ci­a­tion.

Thanks to govern­ment sup­port, pri­vately in­vested fa­cil­i­ties can ex­pect lower bar­ri­ers to en­try and less red tape in busi­ness ap­proval pro­ce­dures in the ar­eas of cap­i­tal, premises and per­son­nel, ac­cord­ing to Qu Qin, man­ag­ing part­ner of Law View Part­ners in Shang­hai.

More in­cen­tives may in­clude the “in­tro­duc­tion tax pref­er­en­tial treat­ment, par­tic­u­larly with re­spect to busi­ness tax and cor­po­rate in­come tax”, said Qu.

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