HSBC to increase stake in Vietnam’s largest insurance and financial services group
Extends HSBC’s position in key Asian market
Strengthens strategic relationship with Bao Viet
Furthers HSBC ambition to be a leading insurance player globally
HSBC Insurance (Asia Pacific) Holdings Limited (HSBC) has signed an agreement to increase its shareholding in Bao Viet Holdings, Vietnam’s leading insurance and financial services group to 18 per cent from 10 per cent currently for VND1.88 trillion (approximately US$105.3 million).
HSBC acquired a 10 per cent interest in Bao Viet in September 2007. Under the terms of the original agreement, HSBC had an option to purchase a further 8 per cent of Bao Viet shares from the Ministry of Finance (MoF). The MoF has now given formal consent for this option to be exercised through the issue of new Bao Viet shares to HSBC.
Michael Geoghegan, HSBC’s Group Chief Executive, said: “Our additional investment in Bao Viet reflects the successful partnership we have enjoyed over the last two years and the confidence we have in the long-term growth prospects of Bao Viet and of Vietnam. This is also entirely consistent with our stated strategic focus on the world’s faster growing markets and our intention to meet the insurance and wealth protection needs of our customers in these rapidly developing markets.”
Mr Le Quang Binh, Chairman of Bao Viet Holdings, said: “After two years of successful co-operation, we are pleased HSBC is able to increase its shareholding to 18 per cent. The Ministry of Finance has supported the private placement as an alternative approach to acquiring shares from the Ministry. The increased shareholding by HSBC adds to the financial position of Bao Viet and its capacity to finance its growth and development. It also reflects HSBC’s commitment as the most important strategic shareholder in Bao Viet.”
A total of 53,682,474 new shares will be issued to HSBC through a private placement to increase HSBC’s stake in Bao Viet to 18 per cent. Completion of the private placement is subject to shareholder approvals and other conditions as well as approval from the State Securities Commission.
As part of the original agreement, HSBC continues to hold certain pre-emptive rights to acquire shares currently owned by the MoF with a maximum HSBC shareholding of 25 per cent within the first five years of the agreement and prevailing foreign ownership limits thereafter.
With a population of 87 million, a quarter of which is under the age of 15, Vietnam is one of the few economies that has continued to see resilient GDP growth throughout the financial crisis. Over the past few years, the government has introduced supportive measures to liberalise Vietnam’s financial markets and HSBC has correspondingly strengthened its presence and investments in the country. In addition to its strategic investment in Bao Viet, HSBC also holds a 20 per cent stake in Vietnam Technological and Commercial Joint Stock Bank (Techcombank). HSBC also locally incorporated its Vietnam operations in January this year, and subsequently expanded its distribution network from two branches and one representative office to 10 outlets currently. It has also partnered with Vietnam Posts Corporation to provide access to some of HSBC’s banking services for customers at over 1,600 post offices across the country.
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