Chinese company Fosun, already the owner of the previously Portuguese insurance company Fidelidade, is to become the largest shareholder in Portugal’s largest privately owned bank, Millennium BCP.
Fosun is led by the tycoon Guo Guanchang, known as ‘China’s Warren Buffett,’ and is but one deal that recently has seen significant acquisitions in Portuguese companies by Chinese groups which have bought in electricity generation, the national grid, insurance, hospitals and water supply.
The Chinese group has agreement that it can purchase a 16.7% stake at a cost of €175 million reflecting the bank’s weak position of badly performing loans and its two taxpayer rescues since 2014.
The sale was made through a private placement of new shares at €1.1089 a share, an 11% discount on last Friday’s closing price. BCP, whose share price has fallen by more than two-thirds over the past twelve months, has a market value of about €1bn.
BCP has been trying to boost its capital as it addresses regulator's requests and the burden of non-performing loans. Fosun will acquire two seats on BCP’s nine-strong board and will be able to appoint three non-executive directors if its shareholding rises above 23%.
Fosun said that over time is seeks to hold around 30% of BCP and stated, "The transaction is expected to extend the group's international network and help the group enter Poland, Mozambique, Angola and Switzerland’s financial markets rapidly."
Angola's state oil company Sonangol, now run by the president's daughter Isabel dos Santos, was until now the largest shareholder in BCP with a stake of 17.84%, followed by Spanish bank Sabadell with 5.07%. But after the dilution of BCP's existing capital Fosun will become the largest shareholder with its 16.7% stake.
Fosun is China's largest privately-owned conglomerate and already is known in Portugal for its stakes in Fidelidade and the medical group Luz Saude.
The Chinese company made a bid for Novo Banco last year but its offer was judged too low by the Bank of Portugal, which pulled the sale process until re-launch in 2016 in a process that Fosun did not seek involvement. BCP has been under acute pressure since the summer and announced a third-quarter loss of €53.8 million due to an increase in provisions for bad debts.
BCP’s sale of shares to Fosun comes as Portugal’s financial sector undergoes a transformation of ownership to clear out bad loans and to increase capital.
Portuguese companies and the government have welcomed Chinese capital as a way of rescuing many insolvent companies that are seen as 'too big to fail.'
Mr Guo has a fortune of $6.6bn, according to the Hurun report. The 49-year-old tycoon has used cash from his group’s insurance businesses to fund its expansion into other sectors.
The purchases have cemented Mr Guo’s reputation as one of his country’s most acquisitive tycoons despite a run-in with the authorities in December 2015, when he was detained to help police with their inquiries in a corruption investigation unrelated to Fosun.
Mr Guo was not charged with any wrongdoing in connection with the investigation, which focused on a former Shanghai vice mayor.
