By Eric Min
Fosun International Ltd. (0656.HK), China’s largest private conglomerate by revenue, was preparing to set up a$1 billion fund to scour the globe for bargains in an effort to scale up its investment overseas, Liang Xinjun, chief executive officer of the company, told the Financial Times.
According to the shanghai newspaper, Oriental Morning Post, Liang and John Snow, former U.S. Treasury secretary and adviser to the Fosun board, had met and expressed interest to some Middle Eastern sovereign wealth funds in Dubai, Abu Dhabi and Doha this month.
Fosun’s former partners were always private equity giants or financial conglomerates like Carlyle Group and Prudential Financial Inc. A partnership agreement was signed between Fosun and a Danish investment firm Axcel during Chinese President Hu Jintao’s visit to Denmark recently.
The Shanghai-based group is a diverse conglomerate controlling 42 listed companies, which made a net profit of 3.4 billion yuan ($534m) on sales of 56.8 billion last year.
But “a decade of growth led by industries and infrastructure in China is over. Today, there are too many cars, too many airports and too many ports, which is why we are going to turn our focus to more consumer-oriented sectors,” Liang said.
It is under pressure to move away from its dependence on property, steel and mining – sectors that generated 88 percent of its revenue last year but have been among the hardest-hit as China’s growth has slowed. The group’s Hong Kong-listed shares have fallen 15 per cent since February, against an 8 per cent decline in the broader Hang Seng index.
The Financial Times said Fosun wants to take advantage of the Eurozone crisis and the weakness of the U.S. economy, and has approached sovereign wealth funds among others to be its partner as it hunts for deals in the consumer, financial services, green energy and healthcare sectors.
“There is a window of two to three years when assets in Europe and the U.S. will be undervalued. We are looking for sovereign wealth funds, pension funds and endowment funds which can help us scale up our investments in general,” Liang said “On our own, we are only comfortable with investing $50-200 million in each project” to minimize risk.