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China’s JD Capital Buys Ageas’ Hong Kong Unit

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August 31, 2015

 

Chinese asset management company, JD Capital, has agreed to buy Ageas’ Hong Kong insurance unit. The Belgian insurance company announced the deal on Sunday, revealing the deal is worth $1.4 billion. Although China’s stock market has been in turmoil, the latest deal highlights the continued strong appetite for deals by Chinese companies.

 

The Deal

 

Ageas released a statement on Sunday stating the insurer would move the whole life insurance unit in Hong Kong to the ownership of the Chinese firm. Despite selling the unit, the insurer reassured its position is to continue to strengthen its Asian operations. The insurer stated that its focus would be more on the quickly emerging markets of the region.

 

Gary Crist, CEO of Ageas Asia, said in the statement, “We remain firmly committed to the Asia region as demonstrate by our recent transactions in the Philippines and Vietnam. We continue to look for organic and inorganic growth opportunities, leveraging on our strengths in building joint venture partnerships with strong financial institutions.”

 

The deal is worth $1.4 billion and it is expected to be completed during the first half of 2016. The deal will still be subject to regulatory approval, as well as JD Capital’s shareholder approval.

 

The insurer acquired a stake in the Hong Kong unit back in 2007 from Richard Li. It saw the unit’s life reserves drop to €3.1 billion at the end of June from the €3.3 billion in the previous quarter. Customer inflows also declined by 3% in local currency during the first six months of the year.

 

China’s Largest Private Equity Firms

 

The Chinese asset management company was set up in 2007. JD Capital is also known as Beijing Tongchuang Jiuding Investment Management. It is currently listed on the Chinese National Equities Exchange and Quotations and it is has a number of operations on-going in the financial sector.

 

It is in charge of one of China’s largest private equity firms, JD Capital Management. JD Capital has offices elsewhere in the world, both in Asia and North America. So far, the company has made investments in over 200 companies, with many of them in the process of listing on the stock market.

 

Chinese companies are still showing plenty of interest in the buyout market, even though the stock market has produced some shocks in recent weeks. It remains to be seen what sort of effect the troubles in the Chinese economy will have on the buying appetite of Chinese companies in the long-term.

 

Foreign Insurers Leaving the Market

 

The Hong Kong insurance market has seen two exits by foreign insurers now in a relatively short period. In 2012, the Dutch company ING sold its Hong Kong unit to the then Pacific Century Insurance, currently known as FWD.

 

The market is dominated by two big players, AIA Group and Prudential. But the market is offering companies plenty of growth potential, especially in the life insurance sector. Reuters published data by Sigma Re, which suggests the insurance premium to GDP ratio in Hong Kong’s life insurance market stands at 11.7%. This is the second highest ratio in the region.

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