HSBC is considering selling its stake in Ping An Insurance, the bank’s second-biggest investment in China.
The British bank’s 15.57% stake in China’s second-biggest insurer is valued at more than $9 billion — almost three times the $3.5 billion that HSBC is aiming to save by 2014.
It has been widely speculated that the bank plans to sell all of its 40% stake in Ping An’s Hong Kong-listed shares, which represents 15% of its total stake in the Chinese insurer.
HSBC issued a statement yesterday saying it has “from time to time received approaches regarding its shareholding and confirms that it is in discussions which may or may not lead to the sale of the shares”.
It first invested in Ping An in 2002, two years before the insurer’s Hong Kong initial public offering, by buying a 10% stake for $600 million. The bank bought a further 9.9% stake in the insurer for HK$8.1 billion ($1 billion) from Goldman Sachs and Morgan Stanley in 2005. It paid the two firms HK$13.2 a share, which was a 9% premium at the time.
HSBC’s holding in Ping An was diluted following a share placement in 2011.
Ping An’s share price fell after HSBC’s announcement yesterday. Its Hong Kong-listed shares dropped 1.9% yesterday to HK$58 ($7.48), while its Shanghai-traded shares fell 1.8% to Rmb36 ($5.77).
Morgan Stanley, Goldman, BOC International and HSBC jointly managed Ping An’s HK$14.3 billion Hong Kong IPO.
HSBC has invested more than $7 billion in select financial services entities and in the growth of its own operations in China, making it the biggest foreign bank investor in the country. Its biggest investment is a 19% stake in Bank of Communications, and it also has an 8% stake in Bank of Shanghai.
HSBC has had a continuous presence in mainland China for 147 years and has the biggest footprint of any foreign bank, comprising 131 outlets nationwide.
Ping An, the second-largest insurer in China by assets, made Rmb16 billion in net profit for the first three quarters this year, the highest among all listed insurers.