HONG KONG: China Oceanwide Holdings Group Co has agreed to buy US insurer Genworth Financial Inc for $2.7bn in cash, the latest in a series of moves by Chinese firms to buy overseas assets as their domestic economy slows and the yuan weakens.
In a joint statement on Sunday, Genworth and privately held and family-owned China Oceanwide Holdings said the Chinese firm will pay $5.43 per share to acquire all the Richmond, Virginia-based firm’s outstanding shares. The price is a modest 4.2 percent premium to Genworth’s Friday closing price.
But the Beijing-based holding firm, little known but founded by well-connected Chinese businessman Lu Zhiqiang, agreed to commit another $1.12bn towards Genworth debt maturing in 2018 and life insurance claims charges, the statement said. Both firms’ boards backed the deal, which remains subject to regulatory approvals and likely won’t close before mid-2017.
The purchase comes amid a hectic year for Chinese buyers chasing overseas assets. So far, 2016 has seen mainland firms launch a record $181bn of overseas mergers and acquisitions - about 70 percent more than the whole of last year.
Chinese investment holding firms have joined insurers like Fosun International Ltd and unlisted Anbang Insurance Group in leveraging accumulated capital to buy global assets. Some recent purchases have also come from Chinese property companies, keen to reduce reliance on their home market.
Some recent Chinese bids have attracted intense regulatory scrutiny overseas. But rarely has an insurance deal by a Chinese acquirer been blocked outright by international watchdogs, according to people familiar with these transactions.
In some cases Chinese buyers have also been paying top dollar to secure insurance assets. Thaihot Group paid nearly three times Dah Sing Financial Holdings Ltd’s 2015 embedded value in a recent $1.4bn purchase. That was more than double the valuation at which a previous Hong Kong insurance deal was done.
