December 10, 2016 / 4:27 AM / 3 years ago

Ping An's overseas investments impacted by China's capital outflow crackdown-CFO

(Reuters) - Ping An Insurance Group Co of China Ltd, the country’s second-largest insurer, has seen some of its overseas investments impacted by Beijing’s measures to stem capital outflows, its group chief financial officer (CFO) said on Friday.

A worker cleans the windows of a building in front of the Ping An Insurance building in Shanghai January 16, 2013. REUTERS/Aly Song/File Photo

After facing difficulties converting yuan into foreign currencies and shifting capital offshore, Ping An is seeking to raise debt capital in overseas markets in a bid to overcome the funding issues, CFO Jason Yao said.

Ping An plans to sell U.S. dollar-denominated bonds and borrow from banks offshore to finance its outbound deals, Yao added.

“The Chinese government’s move to tighten capital outflows has an impact on Ping An in the short-term,” Yao said, as it has become more difficult to purchase foreign currency.

China has been stepping up measures to stem capital outflows as it battles to reverse outflows that undermine its currency and eat into its foreign exchange reserves. Record outbound M&As from China this year has put deal flows under the spotlight.

Chinese regulators, however, reiterated on Tuesday that there is “no change” in government policies to encourage Chinese companies to “go global”, according to a statement jointly released by the National Development and Reform Commission, Ministry of Commerce, the People’s Bank of China and the State Administration of Foreign Exchange.

Apart from seeking capital offshore, Yao said Ping An is teaming up with foreign private equity firms and property funds, including Blackstone Group LP, for its outbound deals.

A spokeswoman for Blackstone declined to comment.

Despite uncertainty due to Donald Trump’s U.S. presidential election win and Britain’s vote to exit the European Union, United States and Europe will remain the key markets for Ping An’s overseas investments. Ping An is targeting investments in property, infrastructure and aviation leasing, Yao said.

“Our investments in the U.S. are mainly financial investments, which won’t involve the national interests between the U.S. and China.”

“That [Trump Administration] won’t change our investment strategy in the U.S.”

He added that the Shenzhen-based group has also run out of quota for the Qualified Domestic Institutional Investor (QDII) program, which enables registered Chinese financial institutions to invest a limited amount of funds in foreign financial assets. Ping An declined to disclose the size of its QDII quota.

The financial conglomerate currently has about 5 percent of its total insurance assets abroad, according to Yao. That is well below the 15 percent cap imposed by China’s insurance regulator, giving it ample room to splurge. It plans to gradually increase its overseas investments to 10 percent over the next three to five years.

“Of course we want to increase our overseas investments. I hope it’s not a long-term [clampdown].”

Writing by Denny Thomas; Editing by Muralikumar Anantharaman and Christopher Cushing

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