Ping An unit buys $2.1b stake in China Fortune Land
HONG KONG Ping An Insurance Groups unit is buying nearly a fifth of China Fortune Land Development for 13.8 billion yuan (US$2.09 billion), in a vote of confidence in Chinas property sector amid a slowdown in the broader economy.
China Fortune Land Developments controlling shareholder, China Fortune Land Holding Co Ltd, agreed to sell 582.1 million shares, or 19.7 per cent, of the mid-sized property firm to Ping An Asset Management at 23.655 yuan per share, a five per cent discount to their last close.
With the deal, Ping An Asset will become its second-largest shareholder, China Fortune Land Development said in a statement yesterday.
The stake sale is aimed at strengthening cooperation with Ping An Asset and enhancing corporate governance, competitiveness and earnings capability of the listed firm, the property developer said.
On completion of the deal, the controlling shareholders stake in China Fortune Land Development will be reduced to 41.97 per cent from the current 61.67 per cent. Ping An Asset Managements stake in the developer will increase to 19.88 per cent from 0.18 per cent.
China Fortune Land Development shares jumped by their 10 per cent daily limit in afternoon trade in Shanghai. Ping Ans Hong Kong-listed shares were up nearly one per cent.
Ping An Insurance Group is Chinas most valuable insurer, with a market capitalisation of about $163 billion.
The move comes after the banking and insurance regulator said in June that Chinas insurers could invest in long-term rental housing projects, allowing them to diversify their investment portfolios as stock and bond markets stagnate.
Insurers can invest directly, through asset management firms, credit investment plans or equity investment among other methods in long-term rental housing projects, the China Banking and Insurance Regulatory Commission (CBIRC) said in a notice. REUTERS