China's Ping An aims to raise Fortis stake

By Reed Stevenson

AMSTERDAM (Reuters) - China's Ping An Insurance Co Ltd (2318.HK: Quote, Profile, Research) wants to raise its stake in Fortis (FOR.BR: Quote, Profile, Research) (FOR.AS: Quote, Profile, Research) to 7 percent, to deepen its ties with the Belgian-Dutch financial group.

China's second-largest life insurer recently lifted its stake in Fortis to 4.99 percent from 4.18 percent and bought half of Fortis' asset management business for 2.15 billion euros ($3.4 billion).

"Ping An has declared that it ultimately wishes to obtain a 7 percent shareholding in Fortis, and Fortis has stated that it intends to explore possible means to that end," Fortis said in its annual report, made available on Monday.

Ping An bought its initial stake in Fortis for $2.7 billion in November, as Fortis raised funds for its acquisition of parts of Dutch rival ABN AMRO for 24 billion euros.

Chinese financial firms, flush with cash, have been seeking investments opportunities abroad to fuel growth and have done several deals as their western counterparts find themselves under pressure from the credit crisis.

"We believe we can cooperate successfully with this important player in a number of strategic and commercial areas in Asia, such as asset management and private banking," Fortis Chief Executive Jean-Paul Votron said in a statement.

With the asset management deal, Fortis got a much-needed cash injection to shore up its capital base, eroded by financing for the acquisition of ABN AMRO's Dutch operations and asset management unit as well as subprime-related writedowns.

Ping An will have to seek Fortis's approval to increase its stake beyond 5 percent and 7 percent, the annual report said. Ping An will also be able to increase its stake back to 4.99 percent if the shares are diluted.