China's Fosun on the prowl for European takeovers
By Jonathan Gould and Andreas Kröner
FRANKFURT (Reuters) - Chinese investor Fosun International is looking for more acquisitions in Europe and particularly Germany to give it a range of businesses with strong links to China’s rising consumer classes, Fosun's chief executive said.
Fosun has already invested 3.8 billion euros (£2.8 billion) in 20 projects in Europe but very little of that in Germany, the region's biggest economy, Liang Xinjun told Reuters in an interview.
"In Germany, we'd like to look for other opportunities that can benefit from the China growth momentum," Liang said.
The company has already invested in Club Med and Cirque du Soleil as well as British pram maker Silver Cross, in a timely match for China's latest baby boom, Liang said.
Fosun is keen to find targets in the food, drinks and tourism sectors and is also looking to healthcare investments such as hospital chains, medical equipment, health insurance or health environment companies, in both Germany and the rest of Europe, Liang said.
These would bolster Fosun's "health and happiness" business division, which contributed more than one fifth of the group's $505 million net profit in the first half and which the company hopes to raise to nearly one third in the near term.
China's economy is seen growing at a rate of 6-7 percent over the next five to 10 years, with spending by the burgeoning middle class on "health and happiness" seen rising by 17 percent, Liang said.
Europe is not the only destination for Fosun, which has invested more than $5 billion in the United States and $500 million in Japan.
"We've invested in South Asia and could also do so in Korea and the Middle East," Liang said.
Despite the rise in Fosun's investment activity outside China over the last three years, the company's business model is still not well understood by credit rating agencies such as Standard & Poor's, which rates it "BB", and Liang said he was confident of an improved rating in the medium term.
"We finance many of our investments through our insurance subsidiaries, therefore the level of debt does not automatically rise on a group level when we do takeovers," he said.
The group's debt has been falling since 2013 and it currently has no plans for a capital increase, Liang said.
EUROPEAN FINANCE
In financial services, Fosun is working to finalise its takeovers of private banks Hauck & Aufhaeuser in Germany and Anglo-German lender BHF Kleinwort Benson, deals that regulators in Britain, Belgium and Germany have yet to approve.
Fosun's dealings with the regulators have been collaborative and constructive, Liang said.
"We provided all information the regulators asked for and the regulators take their time to review our applications. Everything is within the normal time frame," he said.
Two BHF-Kleinwort-Benson shareholders, Stefan Quandt and Templeton, have said they would only sell their stakes in the lender if Fosun raised its offer of 5.10 euros per share.
Asked about the chances for a sweetener, Liang said Fosun as BHF's largest shareholder wanted to prevent dilution of the lender's value.
"We care about the bank, its customers and employees. We are very open-minded, and would like to continue working with other shareholders as partners," he said.
The two banks would be relatively small takeovers for Fosun but size does not belie their significance, Liang said.
"They are very important because they help us to establish a financial platform not only in Germany, but also on a global scale," Liang said.
Fosun was one of a number of potential buyers for Portugal's Novo Banco, a bank carved out of Banco Espirito Santo. But the Bank of Portugal has postponed the sale.
(Reporting by Jonathan Gould. Editing by Jane Merriman)
