HSBC to sell stake in China's Ping An for $9.4bn

Britain's HSBC said it would sell its stake in China's second largest life insurer Ping An for $9.4 billion, as it looks to shift its focus back towards its traditional banking business. The lender said in a statement it would sell its entire 15.57 percent holding in Ping An Insurance Group to Thai conglomerate Charoen Pokphand Group at HK$59 ($7.66) a share, making it the biggest foreign purchase by a Thai firm. Ping An recently hit the headlines after the New York Times said last month that relatives of Chinese Premier Wen Jiabao had gained from its Hong Kong listing in 2004 by buying stock at a discount before the sale. The insurer has denied those claims and threatened legal action against the newspaper. HSBC Group Chief Executive Stuart Gulliver said in the statement the sale would benefit shareholders, but added that China remained "a key market for the group". He said the firm would "strengthen our focus on growing our own operations and building on our long-term strategic banking partnership with the Bank of Communications", China's fifth largest lender, in which HSBC has a 19 percent stake. HSBC, which first bought into Ping An in 2002, has been selling its non-core assets as part of a broad restructuring plan designed to boost profitability. "They can unload their non-core assets and resources to refocus on their main business, which is banking," Tanrich Securities Vice President Jackson Wong told AFP. London and Hong Kong-listed HSBC is also setting aside hundreds of millions of dollars as provision for fines related to possible criminal charges over money-laundering allegations in the United States. Ping An said it "respected" the decision by HSBC to divest and credited the bank for helping it grow its financial business. While Ping An's core business is life, property and liability insurance, it has interests in other financial services, and has its own bank. A spokesman for the firm, Sheng Ruisheng, told AFP it did not plan to make any changes to strategy with the new stakeholder. "Charoen Pokphand Group agrees with Ping An's strategic culture and business model and has full trust and confidence in Ping An's management team," he said. Charoen Pokphand, backed by Thai tycoon Dhanin Chearavanont, began as an agricultural business but has grown into a huge conglomerate with interests in sectors from retail to telecoms and software solutions to real estate. It saw annual revenue of more than $33 billion in 2011. The firm was one of the first overseas agribusiness companies to invest in China in the late 1970s and now accounts for more than a quarter of its poultry exports. Shares in Ping An climbed after the announcement, surging 4.68 percent to HK$60.35 in Hong Kong and 3.66 percent to 28.76 yuan in Shanghai. HSBC was 1.27 percent higher at HK$79.70 in afternoon trade in Hong Kong. A Ping An official, who declined to be identified, told AFP on Wednesday that HSBC started negotiations on the sale "long ago" in advance of the New York Times report. The paper last month reported that Ping An chairman Ma Mingzhe wrote in 1999 to Wen, who was vice-premier at the time, and met his wife as the government considered a decision on whether to split up the company. After the lobbying, it said, the government granted Ping An a waiver from a requirement that large financial companies be broken up. Following the decision, an investment vehicle -- later controlled by relatives of Wen -- bought shares in Ping An at a significant discount, long before most other investors could buy into it, the report said. Ping An said of the report that "recent media coverage related to the company" contained "serious inaccuracies, facts being distorted and taken out of context, as well as flawed logic". -- Dow Jones Newswires contributed to this story --