Ocean­wide to ac­quire US in­surer

China Daily (USA) - - ACROSS AMERICA - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa. com

A Chi­nese in­vest­ment com­pany best known for its US com­mer­cial and res­i­den­tial real es­tate projects has agreed to ac­quire US in­surer Gen­worth Fi­nan­cial Inc in a deal val­ued at about $2.7 bil­lion.

China Ocean­wide Hold­ings Group Co is buy­ing Rich­mond, Vir­ginia-based Gen­worth, which fo­cuses on home mort­gage in­surance and long-term care in­surance. It will pay $5.43 a share to ac­quire all of Gen­worth’s out­stand­ing shares. The price is a mod­est 4.2 per­cent pre­mium to Gen­worth’s clos­ing price on Oct 21.

The pro­posed deal con­tin­ues the shop­ping spree by Chi­nese com­pa­nies for over­seas as­sets this year as the main­land econ­omy slows.

Ocean­wide is a pri­vately held firm that was started by busi­ness­man Lu Zhiqiang. In the US, the com­pany has been an ac­tive par­tic­i­pant in real es­tate deals through its sub­sidiaries in Cal­i­for­nia, Hawaii and New York.

“Gen­worth Fi­nan­cial’s strug­gle to sta­bi­lize its trou­bled long-term care (LTC) in­surance unit, to de­liver its hold­ing com­pany and to un­lock the value of its US mort­gage in­surance unit may have proved too chal­leng­ing,” an­a­lyst Mark Palmer of BTIG LLC wrote in re­search note on Mon­day.

China Ocean­wide has com­mit­ted to con­tribut­ing $600 mil­lion in cash to­ward Gen­worth’s debt ma­tur­ing in 2018 as well as $525 mil­lion in cash to bol­ster its US life in­surance busi­nesses. The trans­ac­tion, an­nounced on Sun­day, is sub­ject to US reg­u­la­tory ap­provals and likely would not close be­fore the mid­dle of 2017.

“Given on­go­ing un­cer­tainty at (Gen­worth’s) LTC unit, and tak­ing into ac­count the $1.1 bil­lion in ad­di­tional cap­i­tal that China Ocean­wide agreed to con­trib­ute as part of the deal, we be­lieve higher bids for the com­pany are un­likely to emerge,” said Palmer.

. . . Un­lock (ing) the value of its US mort­gage in­surance unit may have proved too chal­leng­ing.” Mark Palmer, an­a­lyst, BTIG

Ocean­wide has ex­panded from a lo­cally based de­vel­oper in eastern China into a con­glom­er­ate with in­vest­ments in bank­ing, in­surance and tech­nol­ogy. The com­pany’s first US project was in down­town Los An­ge­les and the sec­ond in­vest­ment was in Sonoma County, Cal­i­for­nia, a 360-acre project with a win­ery, a ho­tel and sin­gle-fam­ily homes.

The third in­vest­ment was Ocean­wide Cen­ter, ac­quired in 2015. It in­cludes two tow­ers at First and Mis­sion streets in San Fran­cisco.

The First Street Tower will be 850 feet tall with more than 1 mil­lion square feet of of­fice space, and more than 100 lux­ury con­do­mini­ums.

The Mis­sion Street Tower will be 605 feet with more than 155 lux­ury con­do­mini­ums and a five-star lux­ury ho­tel. When com­pleted, the First Street Tower is ex­pected to be the sec­ond-tallest build­ing in San Fran­cisco.

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