Fosun International, the owner of the Club Med resorts and one of China’s biggest private conglomerates, has denied media reports that Chinese regulators had asked commercial banks to examine their potential exposure to the company.
Alex Gong Ping, chief financial officer of Shanghai-based Fosun, said reports that Chinese authorities ordered the nation’s biggest banks to examine their financial exposure to the company were “completely false”.
“Neither the China Banking and Insurance Regulatory Commission (CBIRC) nor the Shanghai Banking and Insurance Regulatory Commission have asked commercial banks to find out about Fosun’s financial exposure, and those institutions have not received any notice of this,” Gong told the South China Morning Post late Tuesday.
Fosun, which was co-founded by Chinese businessman Guo Guangchang in 1992, was once among the nation’s most-prolific overseas acquirers, with diversified assets from financial, healthcare, property, tourism and fashion businesses.
A company logo of Fosun. Photo: Handout
The company was downgraded by Moody’s Investors Service in August over concerns about its liquidity, elevated refinancing pressure and potential contagion risk from weak subsidiaries exposed to the Chinese property market.
The company’s shares have lost nearly 17 per cent of their value in Hong Kong since the downgrade, and its bonds had been under selling pressure. Fosun’s shares declined 4.1 per cent to close at HK$4.90 on Tuesday, near its lowest level since 2013.
Fosun International’s senior executives during an event in Hong kong on August 29, 2018. Guo Guangchang the co-founder and chairman was the third from the left, while Alex Gong Ping, then executive director, was the first on the right. Photo: Bloomberg.
Citing unnamed sources, Bloomberg reported on Tuesday that multiple regulators, including China’s banking watchdog agency and the local commission that oversees state investments in Beijing, recently told institutions under their oversight to closely examine their Fosun exposure.
Bloomberg also said that the Beijing branch of the State-owned Assets Supervision and Administration Commission (Sasac) had asked local state-owned enterprises for details about their links to Fosun, including stock holdings, debt lending and guarantees.
After inquiring with the regulator, Gong, the Fosun executive, said the survey being conducted is “routine information collection work by the Beijing Sasac system, without any specificity.”
“We have access to various funding channels and stable sources of funding,” said Gong, citing that the company’s financially healthy and resilient to challenges.
After the signing of a strategic cooperation agreement with state-owned Industrial and Commercial Bank of China (ICBC) on July 19, the company renewed a strategic cooperation agreement with HSBC China on August 26, Gong said.
Fosun had total liabilities of 651 billion yuan (US$94 billion), with cash and cash equivalents of 117.7 billion yuan as of the end of June, according to Bloomberg.
Signage at Lanvin Headquarters in Paris. Fosun reached a deal in March to list the luxury house in New York via a special purpose acquisition vehicle. Photo: AFP
“Our total debts were 651 billion yuan, but many of them are under our listed or unlisted units, such as Shanghai Fosun Pharmaceuticals. Our own debts are much less than that amount,” said Gong, without disclosing the figure.
In March, Fosun reported a 26 per cent year-on-year increase in net profit to US$1.6 billion for 2021.
But in the wake of the current business environment, and its efforts to streamline its portfolio, Gong said the company has been offloading some noncore assets.
Fosun reached a deal to list luxury fashion house Lanvin Group in New York in March via a special purpose acquisition vehicle (Spac), sold US insurance group AmeriTrust to AF Group in April and agreed to sell its entire stake in Tsingtao Brewery Company for US$527 million in May.
This month, Fosun Pharma said its controlling shareholder, which is wholly owned by Fosun International, plans to planned to sell up to 3 per cent of company’s total share capital.
Fosun International also sold 28 million Hong Kong-traded shares of Fosun Tourism to independent third parties after trading hours on September 5 . It still holds about four-fifths of Fosun Tourism.
Keyword: Club Med’s owner Fosun denies reports about being under bank’s scrutiny for debt>