Every dog has its day. Fifteen years ago, banking giant HSBC emerged as the second largest shareholder of Ping An Insurance before its initial public offering. Now the tables have turned – Ping An has emerged as the second largest shareholder of HSBC.
Through its asset management arm, Ping An disclosed that it now has 5%, or 1.01 billion shares of HSBC through Stock Connect Southbound after acquiring HK$777 million (US$99 million) worth of shares on Tuesday.
With a stake valued at HK$77.3 billion, the mainland insurance, broking and banking company is now ranked just behind Blackrock in the list of top shareholders. The latter has a 6.74% stake in Europe’s most profitable bank.
The HSBC stake is worth about 14% of Ping An’s market capitalization, which is about HK$543 billion. The stock buy-up represented almost 97% of the bank’s shares traded on Tuesday, according to Ming Pao, a Hong Kong newspaper.
In a press release, the Shenzhen-based financial conglomerate said that the shareholding in HSBC was a financial investment.
“HSBC’s business performance is excellent and its dividends are good,” Ping An said. “This complements the assets and liabilities matching principles of Ping An Asset Management’s insurance funds.”
HSBC also welcomed Ping An as a long-term investor because it is a non-state-owned public company with excellent corporate governance and stable operations, and has a long-term and cooperative relationship with the bank.
Between 2002 and 2004, HSBC acquired a 19.9% stake in Ping An for a total of 14 billion yuan (US$1.7 billion). In 2013, it sold the stake to Thai-Chinese billionaire Dhanin Chearavanont for 70 billion yuan.
Now the value of the 19.9% stake is worth about 200 billion yuan.
Currently, Ping An is about one-third of the size of HSBC in market capitalization. But the Chinese insurer is working hard to close the gap even more with its former and admired parent.