Top HSBC shareholder Ping An exploring ways to cut US$13 billion stake
PING An Insurance Group is weighing options that would allow it to reduce its 8 per cent stake in HSBC Holdings, according to people familiar with the matter.
One option an internal team at the Chinese insurance giant is considering is further share sales, similar to the US$50 million sale it disclosed last week, as it seeks to reduce its US$13.3 billion position in Europe’s largest lender, the people said, declining to be identified as the deliberations are private.
A sovereign wealth fund or ultra-rich investor in the Middle East taking a sizeable stake is another possibility, some of the people said. It’s unclear whether there have yet been formal talks about a larger sale of the stake and how feasible it would be, although members of the insurer’s board are currently visiting the Gulf, two of the people said.
The openness to reducing its stake reflects Ping An’s desire to lock in some profits from its investment and a recognition that the more dramatic changes it has pushed for at HSBC currently stand little chance of succeeding.
A representative for Ping An Asset Management, the firm’s investment unit, declined to comment. HSBC declined to comment.
Shares in HSBC were trading 1.3 per cent lower at 692 pence a piece at 4.30 pm in London, reversing earlier gains.
Ping An has had a contentious relationship with HSBC in recent years as it campaigned for the bank to embark on a series of reforms, including spinning off its Asian arm. Those efforts were largely defeated at a meeting of the bank’s shareholders last year.
Earlier this month, the insurer lodged a futile protest vote against chief executive officer Noel Quinn at the company’s annual shareholder meeting just days after he surprised the business world with the announcement that he would retire from the lender.
HSBC is now leaning towards appointing its next CEO from a shortlist of internal candidates, including chief financial officer Georges Elhedery and Nuno Matos, head of wealth and personal banking, Bloomberg News reported this week.
During the insurer’s ownership of the stake, HSBC has had four chief executives who have all had to navigate the deterioration of ties between China and the US.
Asset managers are increasingly looking to sidestep those tensions as they make new investments. Temasek, a major investor in HSBC’S rival Standard Chartered, has said it will focus on investing in companies with large, domestic-focused businesses as it seeks to avoid those risks.
This month, Ping An’s asset management arm sold US$50 million of HSBC shares, decreasing the insurer’s stake in HSBC from 8.01 to 7.98 per cent. It was the first time Ping An disclosed that it’s disposed of the stock since the company began its campaign against the bank.
Ping An emerged as a major shareholder in HSBC in 2017. In September 2020, the company scooped up 10.8 million shares of HSBC at an average cost of HK$28.2859 apiece. At the time, the lender’s shares were under pressure because it was participating in a US probe of Huawei. The firm’s stock has soared since then as investors cheered Quinn’s efforts to shed non-core assets and boost returns.