PING An Insurance Group rose the most in three months in Shanghai trading yesterday after HSBC said it will sell its entire stake in the insurer for US$9.4 billion to Thailand's Charoen Pokphand Group.
HSBC will sell its 15.6 percent stake in the insurer for HK$59 (US$7.60) per share to the Thai group, an agribusiness, food, retail, distribution and the telecommunications conglomerate controlled by Thailand's richest man Dhanin Chearavanont, the lender said in a statement yesterday.
HSBC will transfer 21 percent of the shares tomorrow. The remaining 79 percent, to be partially financed by China Development Bank, will be transferred after regulatory approval by the China Insurance Regulatory Commission.
The transaction will be completed within nine trading days after approval or January 7 next year, BOC International, the investment banking unit of Bank of China, said yesterday. Charoen Pokphand will become Ping An's single largest shareholder after the deal is completed, the insurer said.
Ping An, China's second-biggest insurer, jumped 4.1 percent to 38.92 yuan (US$6.25), while the Shanghai Composite Index gained 2.9 percent yesterday. In Hong Kong the insurer rose 4.9 percent to HK$60.50.
"We think the divestment is a result of HSBC's strategic adjustment and is (CEO Stuart) Gulliver's significant step toward divesting non-core businesses," BOC International said in a report.
"After the completion of the deal, the capital adequacy ratio in HSBC will increase by 1 percentage point."
UBS Securities raised the insurer's 12-month target price from 55.18 yuan to 56.35 yuan in a report yesterday. But it cut the forecast for Ping An's net profit this year by 5 percent to reflect likely impairment loss that may occur this quarter.