Fosun’s Guo to Slow Down Global Buying Spree of Insurers, Banks

September 14, 2015 by and

Chinese billionaire Guo Guangchang, who calls himself a student of Warren Buffett, says he will slow down a global buying spree over the next two years after his Fosun Group snapped up insurers, banks and fashion companies at home and abroad.

Guo will focus on completing recent transactions, allowing him to establish a network of insurance and financial services providers across major global markets, the 48-year-old founder and chairman of Fosun said in an interview. China’s biggest closely held conglomerate, which owns Club Mediterranee SA, has announced 10 takeovers worth a combined $6.4 billion in the past year through July, according to data compiled by Bloomberg.

“We have always been very cautious,” Guo said on Friday in New York. “We’ll still look for new investment opportunities, but our main task now is to focus on what we have already established. ”

It’s the first time that Guo has signaled a slowdown in acquisitions as the company seeks to consolidate its businesses and work to reduce its debt level. Fosun International Ltd., the Hong Kong-listed unit, raised $1.5 billion in a rights offer on Sept. 10, a move that Guo said will help lower its leverage and boost investors confidence in the shares.

Fosun will also sell off some of its real estate assets and equities around the world as prices have climbed to a “satisfactory level,” while the scale won’t be massive, he said.

Guo co-founded Fosun with four friends and about $6,000 in capital in the 1990s and later built it by borrowing from the investing approach used by Buffett’s Berkshire Hathaway Inc. It invests in financial assets such as insurance companies to secure long-term funding that can be deployed to expand across a range of businesses.

The worst of China’s stock market turmoil has passed and the economy is not “as bad as portrayed,” Guo said, referring to lower commodity prices, cheaper borrowing costs and resilient consumption growth. The Shanghai Composite Index has fallen 38 percent from its June 12 high as a boom turned to bust.

Guo said mainland health-care and infrastructure companies and Chinese stocks on Hong Kong and U.S. exchanges are attractive. On average, dual-listed companies traded in Hong Kong are about 26 percent cheaper than their counterparts in Shanghai, data compiled by Bloomberg show.

“Be fearful when others are greedy and greedy when others are fearful,” Guo, who often cites Buffett, said. “At least you don’t have to be so fearful at the moment.”

Guo said he has only met once with Buffett, who told Bloomberg TV on Sept. 8 that he’s “bullish on China.”

Fosun International’s shares have declined 38 percent since a peak in May, cutting their gain this year to 31 percent. The average forecast of eight analysts surveyed by Bloomberg is for a 70 percent advance in the next 12 months.

Some of Fosun’s biggest acquisitions include Greek jewelry brand Folli Follie and One Chase Manhattan Plaza in New York. In July, it said it bought the former Milan headquarters of Italy’s UniCredit SpA in a deal valued by the seller at 345 million euros ($391 million). It recently agreed to buy German private bank Hauck & Aufhaeuser Privatbankiers KGaA and offered to buy out Brussels-based BHF Kleinwort Benson Group SA for as much as 500 million euros.

Guo’s wealth has jumped by 31 percent this year to $5.6 billion, according to the Bloomberg Billionaires Index. His closely held Fosun Holdings Ltd. controls Fosun International and the Hong Kong- and Shanghai-listed drugmaker Shanghai Fosun Pharmaceutical Co.

–With assistance from Emma Dong in Shanghai.

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