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China's UCF Group Backs $914 Million Deal for Hong Kong Insurer

China UCF Group Co., the conglomerate led by businessman Zhang Zhenxin, is backing the acquisition of Hong Kong Life Insurance Ltd. in a deal valuing the insurer at HK$7.1 billion ($914 million).

Hong Kong Life’s owners, including Chong Hing Bank Ltd. and Oversea-Chinese Banking Corp., agreed to sell their holdings to an investment firm called First Origin International Ltd., according to a filing late Monday. It didn’t disclose the buyer’s ultimate shareholders. UCF Group is the owner of First Origin, a spokeswoman for Hong Kong Life said by phone Tuesday, confirming an earlier Bloomberg News report

First Origin’s shareholders could still change to allow minority partners to join UCF Group in the Hong Kong Life purchase, people familiar with the matter said, asking not to be identified because the deliberations are private. The company agreed to continue distributing Hong Kong Life’s policies on a non-exclusive basis through the branch networks of most of the banks that previously controlled the insurer, one of the people said.

UCF’s agreement marks at least the third attempt by a mainland financial institution to buy a Hong Kong insurer as they seek to cater to surging Chinese demand for offshore insurance-linked products. The buyer will need to get Chinese regulatory approval at a time of rising scrutiny on overseas dealmaking after the record $247.9 billion wave of foreign acquisitions last year by the nation’s companies. 

First Origin has paid a non-refundable deposit of HK$710 million, equal to 10 percent of the transaction value, according to a Hong Kong exchange statement from Chong Hing. 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, people familiar with the matter said earlier this month.

UCF Group didn’t immediately respond to emailed queries.

Shares of Hong Kong Life shareholder Asia Financial Holdings Ltd. rose 7.9 percent to HK$4.37 at the mid-day break in Hong Kong, on track for the biggest gain since May 2015. Hong Kong Life’s owners were advised by Nomura Holdings Inc. and Goldman Sachs Group Inc. on the sale, the people said. 

UCF Group, 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, who is the largest shareholder of Hong Kong-listed Credit China FinTech Holdings Ltd. and was previously an executive at a top Chinese brokerage.

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