China approves Ping An stake sale

The Charoen Pokphand Group of Thailand now owns a 15.6% stake in China’s biggest private insurer.

The China Insurance Regulatory Commission, the insurance regulator, approved the sale after China Development Bank agreed to back the deal. Doubts earlier arose about CP Group’s ability to finance the deal. CIRC would have blocked the deal without CDB’s participation.

HSBC, which is selling the stake, will make a profit of some US$3 billion while CP Group has already made a US$1.9 billion paper profit because Ping An’s shares are 20% higher than the HK$59.00 CP Group agreed to pay.

The Thai conglomerate bought the stake between four of its subsidiaries, which had not needed to draw down on the CDB credit line. HSBC said the CP Group subsidiaries involved had now paid for the rest of the stake in cash.

The subsidiaries were able to take cash from other parts of the group to fund their purchases of Ping An shares, which means the stake was not ultimately bought by entities that themselves were encumbered by any debt.