Fo­sun plans as­set sales in re­ver­sal of M&A spree

China Daily (USA) - - BUSINESS - By BLOOMBERG

Fo­sun Group, one of China’s most ac­quis­i­tive con­glom­er­ates, is pre­par­ing to sell as much as 40 bil­lion yuan ($6 bil­lion) in as­sets as it turns its fo­cus to­ward rais­ing its credit rat­ing to above junk.

As it steps back from the more than $15 bil­lion in over­seas pur­chases made or an­nounced since 2010, the group plans to dis­close the dis­pos­als be­tween now and the end of 2017, Liang Xin­jun, chief ex­ec­u­tive of­fi­cer of flag­ship unit Fo­sun In­ter­na­tional Ltd, said in an in­ter­view aired on Bloomberg Tele­vi­sion on Mon­day.

“We will sell as­sets to re­pay debts,” Liang, 47, said in Shang­hai. “We have am­ple ca­pa­bil­ity to get in­vest­ment grade rat­ings. So ei­ther strate­gi­cally, or tac­ti­cally, Fo­sun is crys­tal clear that this has be­come our strat­egy.”

Fo­sun’s dwin­dling ap­petite for for­eign tro­phies — it owns ClubMed, Wall Street’s 28 Lib­erty build­ing and Cirque du Soleil — makes it an out­lier at a time when the likes of China Na­tional Chem­i­cal Corp and Dalian Wanda Group Co are push­ingChi­nese com­pa­nies to their big­gest-ever year of over­seas ac­qui­si­tions. Rather than join­ing the fray, Fo­sun is fo­cus­ing on get­ting leaner be­fore its next phase of growth.

Liang is one of the three founders run­ning the in­sur­ance­con­glom­er­ate — the other two be­ing Chair­man Guo Guangchang and Pres­i­dent Wang Qun­bin — who spoke on July 24 with Bloomberg in a wide-rang­ing in­ter­view on top­ics rang­ing from their am­bi­tions of turn­ing the com­pany into a $100 bil­lion be­he­moth to the im­pacts of a pos­si­ble Don­ald Trump pres­i­dency and Brexit. Guo, whose brief dis­ap­pear­ance in De­cem­ber trig­gered a rout of Fo­sun shares, sig­naled the group will move away from cen­tral­ized lead­er­ship.

As to the dis­pos­als, Liang pointed to about 30 bil­lion yuan to 40 bil­lion yuan in as­sets such as prop­er­ties, bonds, and stock hold­ings that could be sold off. Fo­sun could part with more than that if it chose to be­cause the com­pany

We have am­ple ca­pa­bil­ity to get in­vest­ment grade rat­ings. So ei­ther strate­gi­cally, or tac­ti­cally, Fo­sun is crys­tal clear that this has be­come our strat­egy.” chief ex­ec­u­tive of­fi­cer of flag­ship unit Fo­sun In­ter­na­tional Ltd

Liang Xin­jun, had 118 bil­lion yuan of as­sets avail­able for sale at the end of 2015, of which 102 bil­lion yuan were parked in listed shares and bonds.

So what will they sell? The ex­ec­u­tives de­clined to say but Fo­sun’s fo­cus is shift­ing to­ward health­care, fi­nance and leisure. That means busi­nesses such as steel and min­ing — which ac­counted for 73 per­cent of profit when the com­pany went pub­lic in 2007 — are ripe for con­sid­er­a­tion to be sold.

Last year, Fo­sun sold stakes in­Nan­jing Iron& Steel Co and cashed out of Shen­zhen-listed Fo­cus Me­dia In­for­ma­tion Tech­nol­ogy Co. The group is also push­ing for ini­tial pub­lic of­fer­ings of its units, in­clud­ing the tourism busi­ness that op­er­ates Club Med, Cirque du Soleil and UK travel group Thomas Cook, ac­cord­ing to Liang.

Be­hind the mo­ti­va­tion to sell are debt rat­ings. Fo­sun In­ter­na­tional is rated three lev­els be­low in­vest­ment grade at Moody’s In­vestors Ser­vice and two notches un­der the thresh­old at S&P Global Rat­ings.

Emerg­ing from the junk stigma, which would ben­e­fit its key in­sur­ance busi­ness, has be­come such a pri­or­ity for Fo­sun that the group el­e­vated it last year as one of its top five strate­gies, ac­cord­ing to Liang.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.