Chinese conglomerate Fosun International sells German private bank HAL to ABN Amro for US$731 million to boost liquidity

Fosun International, one of China's largest private-sector conglomerates, has accelerated its pace of asset disposal after agreeing to sell German lender Hauck & Aufhauser Lampe (HAL) to Dutcj bank ABN Amro for €672 million (US$731 million).

Shanghai-based Fosun, controlled by Chinese billionaire Guo Guangchang, announced on Tuesday that the proceeds of the sale will be used to replenish general working capital.

The deal, the second asset sale conducted by Fosun in Europe since mid-April, is expected to close in the first quarter of 2025. Last month, Fosun sold an 8.2 per cent stake in Belgian insurer Ageas to BNP Paribas for €670 million.

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The divestment aims at streamlining Fosun's portfolio and "enhancing [our] asset-light operation strategy", the company said in a filing to the Hong Kong stock exchange. "It also demonstrates the company's continuous efforts to create maximum value for its shareholders."

Fosun reduced its interest-bearing debts, such as bank loans and corporate bonds, by 15 billion yuan (US$2 billio) to 211.9 billion yuan in 2023, according to its earnings report. Photo: Reuters alt=Fosun reduced its interest-bearing debts, such as bank loans and corporate bonds, by 15 billion yuan (US$2 billio) to 211.9 billion yuan in 2023, according to its earnings report. Photo: Reuters>

Fosun, which is involved in a wide range of industries including tourism, pharmaceuticals, real estate and financial services, aims to cut its debts by 10 billion yuan (US$1.38 billion) annually in the next two to three years, co-chairman Wang Qunbin said during an earnings briefing on March 28.

An asset-light strategy refers to a business model under which a company has only a small amount of fixed assets on its balance sheet.

"[Fosun] could dispose of more noncore assets and could even target disposing of its stake in Hainan Mining, which could generate more than enough liquidity for all of its capital market debts," Andrew Chan, a Bloomberg Intelligence analyst, said in a research note on Tuesday.

Fosun owns nearly half of Shanghai-listed Hainan Mining, which has a market capitalisation of 14.6 billion yuan.

Since April 2023, Fosun has spent more than US$46 million to buy its Hong Kong-listed shares as a way of boosting investor confidence, according to Chan. He added that Fosun is comfortable with its current liquidity buffer, which still has more than US$2 billion in assets that could be disposed of to enhance liquidity.

Fosun reduced its interest-bearing debts, such as bank loans and corporate bonds, by 15 billion yuan to 211.9 billion yuan in 2023, according to the company's annual earnings report. It posted a net profit of 1.38 billion yuan for 2023, turning around from a net loss of 831.8 million yuan a year earlier. Its revenue grew 8.6 per cent to 198.2 billion yuan.

Taking over HAL will strengthen ABN Amro's position as one of the top three wealth-management firms in Germany and increase its assets by €26 billion.

"This is a rare opportunity to add scale to our German activities," ABN Amro CEO Robert Swaak said in a statement. "The proposed acquisition will further strengthen our position and offer employees of the combined group the opportunity to play a driving role in the consolidating German market."

Fosun Tourism Group, Fosun International's leisure and tourism unit, is courting both domestic and international investors. The group, which owns popular resort chain operator Club Med, announced in mid-March it was open to strategic investment as it embarked on the asset-light strategy.

Investors who "share the same values and agree upon the company's strategy" are welcome to acquire stakes in all units, Xu Xiaoliang, Fosun Tourism's chairman, said during a media briefing.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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