(Corrects Forbes valuation of tycoon's wealth in paragraph 6)
* Buyer CP Group is linked to Thailand's richest man
* Asia's second-biggest deal this year
* Acquisition partly funded by Chinese state bank
By Kelvin Soh and Denny Thomas
HONG KONG, Dec 5 A group linked to Thailand's
richest man, Dhanin Chearavanont, has bought global bank HSBC's
entire stake in China's Ping An Insurance for $9.38
billion, with China Development Bank backing Asia's
second-largest deal this year.
HSBC said on Wednesday it had sold the
15.6 percent stake to an affiliate of Charoen Pokphand Group, a
group controlled by Chearavanont which is better known for its
agri-business empire than writing insurance policies.
"This is phenomenal for HSBC shareholders because the bank
is now sitting on at least $8 billion in profit," said Jim
Antos, an analyst at Mizuho Securities in Hong Kong.
"I'm not sure what CP Group would do with the stake though.
I was joking earlier that every Ping An shareholder will now get
a bucket of fried chicken for their insurance policy."
CP Group, whose products include feed for chickens and pigs,
has a long history in China.
Chearavanont - worth $9 billion according to Forbes magazine
- also appears to have strong political connections in Beijing.
State-run China Development Bank is helping to finance CP
Group's Ping An stake acquisition, according to HSBC.
CP Group was the first multinational to invest in China's
agri-business in 1979 and, under Beijing's latest five-year
plan, it was tasked with helping to modernise China's farm
sector. It also operates Lotus super markets in Shanghai,
according to the company's website.
CP Group once held an interest in a Thai joint venture with
German insurer Allianz which it sold for 300 million baht ($9.78
million) in May this year.
For its part, HSBC is on a global plan to divest various
holdings as it seeks to improve its profitability, exiting the
decade-old investment as it looks to sell non-core assets.
Thailand's outbound acquisition prowess has grown
significantly this year, fuelled by a hot stock market and
cashed-up Thai tycoons seeking to invest abroad. Announced Thai
M&A deals have soared to a record $18.7 billion so far this
year, overtaking the total value of deals in 2010 and 2011
combined, according to Thomson Reuters data.
The Thailand SET Index is up 29.7 percent year to
HSBC sold its stake for HK$59 per Ping An share,
for a total of HK$72.74 billion ($9.39 billion). Ping An's Hong
Kong shares were up 4 percent after the news at HK$60.
The bank said in a statement that the sale would complete in
stages, with about a fifth of the stake to be transferred to the
Thai buyer on Dec. 7. The remainder is still subject to approval
by the China Insurance Regulatory Commission.
SENSITIVE SALE FOR HSBC
The Ping An stake, given its size, was an important and
sensitive sale for HSBC - one that was rumoured to be up for
grabs ever since the 2008 financial crisis.
The deal was personally overseen by a three-man team headed
by HSBC CEO Stuart Gulliver. Stephen Moss, group head of M&A for
HSBC, and John Flint, former HSBC head of strategy, were the
principal deal-makers, according to a source with direct
knowledge of the matter.
Analysts expect HSBC's stake in Bank of Communications
(BoCom), China's fifth-largest lender, to be next on
the list. That stake stands at 19.9 percent and is worth about
HK$79 billion, according to Thomson Reuters data.
The bank had spent $1.7 billion to build the 15.6 percent
stake in China's second-largest insurer between 2002 and 2005.
It confirmed it was in talks to sell the stake on Nov. 19, after
the Hong Kong Economic Journal reported the impending sale.
Chearavanont is hoping to realize a similar profit on the
holding that HSBC earned, though whether China's stock market
sees a similar run over the next decade remains to be seen.
UBS advised the CP Group, the source said. UBS declined to
HSBC had two non-executive board seats as part of its stake
in Ping An.
Ping An trades at 2.2 times book value, 33 percent below its
five-year median price to book value ratio, according to data
from Thomson Reuters StarMine.
The sale was expected as part of HSBC's three-year recovery
plan after the 2008 financial crisis and regulatory reforms.
Founded in 1988 as China's first joint-stock insurer, Ping
An has grown into one of the world's largest, with 74 million
clients, more than 175,000 employees, and about 500,000 agents.
The Ping An deal is Asia's second-biggest acquisition so far
this year, behind Chinese oil company CNOOC's planned $15.1
billion purchase of Canada's Nexen.
As part of its Ping An investment, CP Group has agreed to
hold any shares it buys for at least six months, HSBC said.
($1 = 7.7500 Hong Kong dollars)
($1 = 30.6750 Thai baht)
(Reporting by Kelvin Soh and Denny Thomas; Additional reporting
by Clement Tan, Nishant Kumar, and Donny Kwok; Editing by
Michael Flaherty and Mark Bendeich)