Zurich Insurance Group is selling off the remainder of its stake in New China Life, becoming the latest western investor to sell down its Chinese investment.
The Swiss group said it was selling 292.5 million shares, equivalent to 9.4 per cent of the total issued share capital of New China Life. Zurich said that the shares has been priced at (Hong Kong) $25 each, valuing the stake at $943 million.
“European and American investors have been taking profits on their Chinese investments, and that is probably one of the reasons Zurich is doing this,” Marc Thiele, an analyst at Mediobanca, told reporters. “This move will free up capital, and coincides with rumours that they could be interested in the insurance business of Wesfarmers.”
Zurich has declined to comment on those rumours.
Zurich was one of the first western companies to partner with a Chinese insurer, acquiring 20 per cent of New China Life just after the turn of the century for a little less than $60 million at the time. It later invested more than $400 million to avoid dilution. Since that initial investment, Zurich has quadrupled its money, selling down its stake in the past two years.
Zurich came under the spotlight for its Chinese investments back in October, when a secret multi-million dollar deal involving the insurer to carve up that country’s insurance market – brokered by the daughter of China’s former prime minister, Li Peng – came to light. (continued.)
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The deal – uncovered during a court case in the United States (in which Zurich was not involved) – guaranteed Zurich Insurance a huge stake in a major Chinese insurance company – at a time when foreign firms were barred from investing in the sector.
Transcripts and documents obtained by the Telegraph in London, England, provide an insight into the hurdles western businesses have had to leap to gain entrée to the Chinese market – and more importantly, the relationship between money and power in Beijing.
Documents – made public through the anti-corruption campaign currently being waged in China – show that in 1995 Li Xiaolin introduced executives from Zurich to three Chinese businessmen who held majority takes in New China Life – the country’s largest private insurance company.
Zurich was alleged to have paid money in the 1990s into offshore accounts in the Bahamas belonging to Chinese businessmen who owned a majority stake in the then-private insurer, four years before foreigners were permitted to invest in Chinese insurers.
Zurich has said that its holding in New China Life complied with Chinese law.
