British-South African financial group Old Mutual, which has its headquarters in London, has put its 50% stake in a Chinese joint venture up for sale as part of its reorganisation efforts amid tough conditions for foreign insurers in China, according to sources.
Old Mutual is looking to sell its holdings in the 13-year joint venture with state-run power company Guodian Corp. to one or more domestic firms. It is currently working with financial advisers to work out the sale.The group is currently undergoing a broad reorganisation phase to exit non-core and smaller business operations. However, sources told
Reuters that the deal is not yet final and Old Mutual may not push through if bidders fail to meet its expectations.
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The venture is quite small and no estimates for its sale value are available. For the fourth quarter of 2016, its income was RMB118.4 million (US$17.16 million), up 12% year-on-year.
While China is the world’s second-largest insurance market, the foreign ownership limit of 50%, as well as intense competition from local insurers, have made things tough for foreign insurance companies.
Huge Chinese insurers such as China Life Insurance and Ping An Insurance, as well as numerous other medium-sized firms dominate the market, where foreign joint ventures only have a paltry 10% market share.
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