A €1bn offer by Fosun International, China’s largest private conglomerate, has won the bidding for control of state-owned Caixa Seguros, Portugal’s largest insurance group, defeating a shortlisted offer from Apollo Global Management, a US investment fund.
The Lisbon government said on Thursday that Fosun would acquire an 80 per cent stake in the Portuguese company, which is owned by state-owned bank Caixa Geral de Depósitos (CGD) and has a 26 per cent share of the country’s insurance market.
Fosun is the third Chinese investor to buy Portuguese assets that have been privatised since the country requested a €78bn international bailout in 2011.
Apollo and Fosun were the only two bidders shortlisted by Portugal in September out of five preliminary offers, after the government contacted 66 potential investors.
The acquisition gives Fosun control of Fidelidade, Portugal’s largest insurance company, which includes Multicare, a health insurer, and Cares, a travel and transport insurer, among its assets.
Manuel Rodrigues, Portugal’s secretary of state for finance, said Fosun planned to expand Caixa Seguro’s operations into Africa and China and was committed to maintaining the investment beyond the minimum four years required under the privatisation agreement.
The sale will help CGD, Portugal’s largest bank by deposits, repay €1.65bn injected into the lender by the state in 2012. The bank also sold its healthcare unit for €86m in 2012 as Portuguese banks sold off non-core assets to help shore up their capital ratios.
Morgan Stanley, the financial adviser to Fosun on the transaction, said it was the biggest acquisition involving Chinese and European financial institutions since 2008.
Portugal agreed to sell state assets under the terms of its three-year bailout programme that is due to end in June.
Lisbon has raised €8.1bn from privatisations over the past three years, exceeding a €5.5bn target agreed with the EU and the International Monetary Fund.
In late 2011, Chinese utility Three Gorges took a €3.5bn stake in Energias de Portugal, the country’s dominant electricity provider.
Three month later, China’s State Grid bought a 25 per cent holding in Redes Energéticas de Portugal, which runs the country’s electricity and gas grids.
Assets that remain to be privatised include the national airline TAP-Air Portugal, the cargo unit of the national railway company Comboios de Portugal, and parts of Aguas de Portugal, the water utility.
(Published by Financial Times – January 9, 2015)