Reports suggest Thai buyer of British bank’s $9.4bn stake in Chinese insurer might face funding difficulties
There is speculation that HSBC’s $9.4bn (£5.8bn) sale of a stake in the Chinese insurer Ping An could be in difficulty, amid reports the Thai buyer might face funding difficulties.
HSBC was expected to book a $2.6bn profit on the stake after announcing the sell-off in December.
But reports from Beijing and Hong Kong suggest the deal could founder because of concerns about the way the acquisition is being funded by a group of companies controlled by Thailand’s Charoen Pokphand Group.
The South China Morning Post reported that talks between Pokphand and the state-owned China Development Bank to help fund the deal had cooled in recent weeks.
HSBC first took a stake in Ping An in 2002 when it bought 10.1% of the insurer for $600m. In 2005 it paid another $1.1bn to increase its stake to 19.9%, and in 2010 the stake was reduced to 15.6% when the bank did not participate in a cash call on investors by Ping An.
The concerns of the China Development Bank were said to have been caused by reports in the local media that businessman Xiao Jianhua and the former Thai prime minister, Thaksin Shinawatra, were also participating in raising funds for the deal.
Pokphand told Reuters the stakes had been funded by four wholly owned subsidiaries. The first part of the deal has already been completed, with the remainder due to complete by the start of next month. HSBC shares slipped 1% to 659p.
HSBC has said the sale of Ping An does not affect its commitment to China, where it also has a 19% stake in the Bank of Communications, known as BoCom.