China's Legend to Buy Luxembourg Bank Stake for $1.8 Billion

  • Qatar royal family investment vehicle sells 90% stake
  • Banque Internationale is Luxembourg’s oldest private lender

Legend Holdings Corp., the Chinese company that owns computer maker Lenovo Group, agreed to buy a controlling stake in one of Europe’s oldest privately held banks from its Qatari owners for 1.5 billion euros ($1.8 billion).

Precision Capital, the investment vehicle of Qatar royal family members including former Prime Minister Sheikh Hamad bin Jassim bin Jabr Al Thani agreed to sell its 89.9 percent holding in Banque Internationale a Luxembourg SA, Legend said in a Hong Kong filing.

The deal comes amid tightening Chinese restrictions on capital outflow. China is determined to reduce leverage in financial markets and systemic risks ahead of a Communist Party leadership transition later this year, and is stiffening regulation on capital outflows that could weaken the country’s currency. Some active dealmakers -- Anbang Insurance Group Co., Fosun International Ltd., Dalian Wanda Group Co. and HNA Group Co. -- have been under the government pressure to scale back foreign activities.

Founded in 1856, BIL is the oldest privately owned bank in Luxembourg, with assets under management of 38 billion euros at the end of 2016, according to the company’s annual report published in June. The purchase by Legend marks a shift from a recent trend in which European banks and wealth managers have sought investments in Asia to drive growth.

Qatar has been an active investor in European banks, with the country’s sovereign wealth fund holding stakes in lenders including Barclays Plc and Credit Suisse Group AG. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed diplomatic ties and transport routes with the emirate in June after accusing the nation of destabilizing the region with support of Islamist movements, a charge Qatar vehemently denies.

Overseas Investment

China said last month it would prohibit or restrict domestic companies from making overseas investment in sectors including the gaming industry, real estate, hotels and entertainment.

Legend, which holds a 31.5 percent stake in Lenovo Group, the maker of ThinkPad notebooks, has been expanding its footprint. The Beijing-based conglomerate, led by Chinese entrepreneur Liu Chuanzhi and listed on the Hong Kong Stock Exchange in 2015, also controls venture capital fund Legend Capital, Hony Capital, a buyout firm, and property developer Raycom Real Estate Development Co. It also is seeking to increase holdings in the financial sector in one to two years, including joining a group of companies for the purchase of Pension Insurance Corp.

Legend acquired International Business Machines Corp.’s personal computer business in 2004.

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