Ping An Insurance buys stake in Fortis

Ping An Insurance, China’s second largest life assurer based in the south China city of Shenzhen, has paid £1.3 billion to become the largest shareholder in Fortis, Belgium’s largest financial services group.

The acquisition of a 4.2% stake, the largest overseas purchase by a Chinese insurer, sets a precedent for cross-border alliance to develop banking and insurance products. Peter Ma, chairman of Ping An, said the deal will realise valuable benefits because of Fortis’s and Ping An’s shared business model of an integrated banking and insurance platform.

The investment follows a series of overseas investments by Chinese financial institutions. In the summer of this year, China Development Bank paid £1.6 billion for a 3.1% stake in Barclays. In addition, the UK bank also received a $2 billion cash injection from Temasek, the Singapore investment group.

Fortis was part of the consortium, which included RBS, that emerged triumphant from a six-month, €71 billion bid battle to buy the Dutch-based banking and insurance group ABN Amro.

Ping An, the £46 billion insurer listed in Shanghai and Hong Kong, also saw its president, Louis Cheung, joining the firm’s board as a non-executive director.

Shares in Fortis have fallen by over 30% since the start of 2007 after concerns about its exposure to the credit markets and heavy payouts on insurance losses.

Ping An is half as big again as Fortis, which is listed on Euronext in both Brussels and Amsterdam and has a market value of about £34 billion. It is bigger than any London-listed bank except expanding international financial group HSBC.

In its home market, Ping An is booming announcing a fourfold increase in third quarter profits to 3.6 billion yuan (£236 million). However, like many of its equivalents, it is eager to grow internationally, particularly strategic stakes in European or American companies.

The acquisition also follows the announcement that, Citigroup, the world’s biggest bank, received a $7.5 billion cash injection from Abu Dhabi.

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