UCF Group Said in Late-Stage Talks to Acquire Hong Kong Life

  • Beijing-based financial group bids with Credit China FinTech
  • Insurer’s owners seek to reach agreement by end of month

A consortium including China UCF Group Co. is vying with Yue Xiu Group to acquire Hong Kong Life Insurance Ltd., according to people familiar with the matter, in the latest attempt by a mainland company to buy an insurer in the former British colony.

UCF is in late-stage discussions with Hong Kong Life’s owners, who are seeking to reach an agreement by the end of the month, according to the people. The Beijing-based financial group is bidding together with Hong Kong-listed Credit China FinTech Holdings Ltd., the people said, asking not to be identified because the information is confidential.

Hong Kong Life’s owners have been discussing a valuation of more than $700 million, one of the people said. Yue Xiu, an investment arm of the southern Chinese city of Guangzhou, also remains in talks, the people said.

A transaction would mark at least the third planned sale of a Hong Kong insurer to a Chinese acquirer in two years. Owners are seeking to capitalize on a surge in interest from mainland customers in offshore insurance products even as regulators attempt to crack down on such sales.

“Chinese companies are so keen to buy financial assets in Hong Kong that they wouldn’t mind paying a high price, because the choices are very limited,” Ronald Wan, chief executive officer at Partners Capital International Ltd. in Hong Kong, said by phone Friday. “They are interested in financial assets linked to the U.S. dollar given the yuan devaluation.”

Shares of Credit China FinTech fell 2.7 percent, the biggest drop in more than a month, to HK$1.07 at the close Friday in Hong Kong. Hong Kong Life shareholder Asia Financial Holdings Ltd. rose 4.7 percent, the most since November, after earlier jumping as much as 7.9 percent.

Regulatory Approvals

UCF, founded in 2003, has businesses ranging from leasing and foreign exchange to online investment and property with branches in China, Hong Kong, the U.K. and the U.S., its website shows. The company is chaired by Zhang Zhenxin, who is the largest shareholder of Credit China FinTech and was previously an executive at a top Chinese brokerage.

There’s no certainty the talks will result in a deal, and another buyer could still emerge, the people said. Emails sent to a general inquiry address on UCF’s website weren’t immediately answered. Representatives for Credit China FinTech, Hong Kong Life and Yue Xiu declined to comment.

Bidders have been asked to agree to a reverse break fee of as much as 10 percent of the transaction value, according to the people. The money would compensate Hong Kong Life owners if a buyer fails to secure regulatory approvals such as clearance to move the acquisition funds out of China, the people said.

UCF is offering to distribute the insurer’s policies on a non-exclusive basis through the branch networks of the banks that currently control Hong Kong Life, the people said. Hong Kong Life investors include a local unit of Oversea-Chinese Banking Corp. as well as Asia Financial Holdings, Chong Hing Bank Ltd., Shanghai Commercial Bank Ltd. and Wing Lung Bank Ltd., according to its website.

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