Fubon Financial shares up on acquisition
Shares of Fubon Financial Holding Co. ( ), one of Taiwan’s leading financial holding companies, moved higher Tuesday morning after the company announced that insurance arm Fubon Life Insurance Co. ( ) will buy a stake in a Korean insurer, dealers said.
The current buying also reflected optimism over Fubon Financial’s earnings prospects after the company reported a more than 70 percent year-on-year increase in net profit for the first five months of this year, they said.
As of 11:07 a.m., shares of Fubon Financial had added 2.52 percent to NT$65.20 (US$2.10), with 22.69 million shares changing hands.
Led by Fubon Financial’s gains, the financial sub-index was up 1.31 percent, while the weighted index on the Taiwan Stock Exchange was up 0.83 percent at 9,418.88.
“Investors simply seized on the acquisition lead to continue to buy into Fubon Financial shares, pushing up the broader market on Tuesday,” Hua Nan Securities analyst Henry Miao said.
According to the TWSE, foreign institutional investors bought a net 4.43 million Fubon Financial shares Monday, making the stock one of the forces behind the market’s 1.33 percent rise.
Acquire a 48% Stake in Hyundai Life Insurance
In a statement released Monday, Fubon Financial said Fubon Life has agreed to acquire a 48 percent stake in Hyundai Life Insurance, or about 37 million Hyundai Life shares, for about NT$6.12 billion through a rights issue by the South Korean insurer.
After the completion of the deal, Fubon Life is expected to gain five of the 11 seats on Hyundai Life’s board of directors.
Hyundai Motor Group, which has a 50 percent stake in the insurer, will have the other six seats. The remaining 2 percent stake will be held by some minority shareholders.
The deal is pending approval from financial regulators in Taiwan and South Korea, Fubon Financial said.
According to Fubon Financial, Hyundai Life was established in 1989, when it was called Green Cross Life Insurance.
In 2012, Hyundai Motor bought the insurance company and renamed it company Hyundai Life.
In 2014, Hyundai Life’s insurance premiums surpassed 1 trillion South Korean won (US$905 million), and in the first quarter of this year, its premiums topped 264.1 billion won, up 44 percent from a year earlier.
“The deal showed Fubon Financial’s ambition to extend its reach overseas after big acquisition deals recently. Its expansion efforts prompted investors to buy this morning,” Miao said.
Among Fubon Securities’ major acquisition deals, the company teamed up with another subsidiary, Taipei Fubon Commercial Bank, to acquire an 80 percent stake in Shanghai-based First Sino Bank in early 2014.
First Sino Bank was renamed Fubon Bank (China) Co. in April 2014.
“Fubon Financial is planning to raise about NT$80 billion in funds this year for more acquisition deals. Based on my understanding, the company has set its sights on small-sized financial institutions in China,” Miao said.
Miao said investors have been impressed by Fubon Financial’s profitability. In the first five months of 2015, the company posted NT$37.45 billion in net profit, up 76.5 percent from a year earlier, with earnings per share at NT$3.66.
“Fubon Financial still holds a large chunk of foreign government bonds. If it continues to divest the bonds in the second half of this year, it’s EPS for 2015 could climb above NT$6,” Miao said.