The acquisition is reported to have been for a total $9.4 billion for a 15.57 percent stake in the insurer.
The news has now been released that the Charoen Pokphand Group is taking its first steps into the insurance industry, with the acquisition of 15.57 percent of Ping An Insurance (Group) Company of China.
The purchase of the stake in the Chinese insurer was from HSBC Holdings.
The announcement from HSBC that it was involved in a negotiation for the sale of its share of Ping An was first made on November 19 to the insurance industry. The deal has only just been revealed, showing that the wholly owned HSBC Holdings subsidiaries, The Hongkong and Shanghai Banking Corporation Limited (HSBC Asia Pacific), and HSBC Insurance Holdings Ltd. have agreed to sell their complete stake in Ping An for a total of $9.385 billion.
The four buyers in the insurance industry are all CP Group wholly owned subsidiaries.
These companies are Bloom Fortune Group Ltd., All Gain Trading Ltd., Easy Boom Developments Ltd., and Business Fortune Holdings Ltd. As of December 31, 2011, the carrying value of a Ping An investment had been $6.373 billion. This indicates that HSBC has done very well in terms of being able to profit from the sale.
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According to Stuart Gulliver, the chief executive at HSBC Group, “This transaction represents further progress in the execution of the Group’s strategy. China remains a key market for the Group and we will strengthen our focus on growing our own operations and building on our long-term strategic banking partnership with the Bank of Communications.”
The initial cash payment was made yesterday, on Friday December 7. Further payments will be made until they are all complete on January 7, 2013. These following payments will be made after the China Insurance Regulatory Commission (CIRC) has provided its regulatory approval for the insurance industry deal.
Ping An is a Chinese insurer which, when combined with all of its subsidiaries, is capable of offering significant financial and insurance industry products services to retail and corporate customers in the country. CP has been identified as the first investor from a foreign country in China.