HSBC May Sell $9 Billion Stake in Chinese Insurer
HONG KONG – HSBC Holdings said on Monday that it was in talks about selling its stake in Ping An Insurance of China, which could be worth more than $ 9 billion.
If a sale materializes, it would be the latest of more than 40 noncore assets HSBC has sold since Stuart T. Gulliver took over as chief executive at the beginning of 2011. He has put a high priority on streamlining HSBC’s sprawling global operations and increasing profitability.
“HSBC has from time to time received approaches regarding its shareholding and confirms that it is in discussions which may or may not lead to the sale of the shares,” the bank said Monday in a Hong Kong stock exchange announcement.
It did not identify the potential bidder or bidders. Ping An is one of the largest insurers in China.
HSBC, based in London, made its initial investment in Ping An in 2002, when the bank’s insurance arm paid $ 600 million for a 10 percent stake. The valuation of that initial stake has since risen ninefold, and HSBC has added to it.
Ping An is listed in Hong Kong and Shanghai and has expanded its operations beyond insurance to include banking and asset management.
HSBC owns 40 percent of Ping An’s Hong Kong-traded shares, or so-called H-shares, representing a 15.6 percent stake in the overall company. Based on the stock’s one-month average trading price of 61.42 Hong Kong dollars a share, HSBC’s stake would be worth 75.8 billion Hong Kong dollars ($ 9.8 billion).
Shares in Ping An fell sharply on Monday on the news that HSBC might sell its stake, shedding 3.4 percent at one point before recovering to close down 1.9 percent at 58.45 dollars. At that level, HSBC’s stake would be worth $ 9.3 billion.
In addition to Ping An, HSBC has substantial stakes in the Bank of Communications, one of the largest banks in China, and in a midtier institution, Industrial Bank, which is based in Fujian Province.
HSBC has sold $ 4 billion worth of assets this year and cut the equivalent of 22,000 full-time positions, partly as a result of the sales and partly through layoffs.
It had about 267,000 employees at the end of September.
News of a possible sale was reported earlier on Monday by the Chinese-language daily Hong Kong Economic Journal.