Kane Davis Cooper – Yunfeng Financial Group, which is supported by billionaire Alibaba founder Jack Ma, announced that it would be the lead investor in a $1.7 billion takeover of U.S.-based insurer MassMutual International’s Hing Kong operations. The announcement caused Yunfeng’s shares price to rocket by over 20 percent.
MassMutual, which is based in Springfield, Massachusetts is one of America’s longest running and biggest mutual life insurance companies and has had businesses in Hong Kong and Macau since 2000.
The MassMutual deal is Yunfeng’s first significant buyout and shows the increasing aspirations of Mr Ma’s business empire to increase its worldwide presence.
After the deal goes through, Yunfeng will own 60 percent of MassMutual Asia and other investors such as the Alibaba Group affiliate Ant Financial Services and Singapore sovereign wealth fund GIC-managed City-Scape will hold the balance.
“This transaction is a milestone step of Yunfeng FG becoming a financial conglomerate, integrating its existing fin-tech focused financial services with traditional insurance business,” said Yu Feng, chairman of Yunfeng.
Yunfeng, whose main patron is a private-equity firm under the control of Mr Ma, will pay MassMutual $1 billion in cash and issue a further 800 million shares which are valued around $660 million according to a statement issued by the companies. This will give MassMutual approximately a 25% stake in Yunfeng Financial Group Ltd
Yunfeng’s shares were 22 percent higher in early trading after falling back a little from a height of 30 percent.
MassMutual Asia has two main operations, the first is in the general insurance business and the second concentrates on the Mandatory Provident Fund business, a mandatory retirement pension plan for Hong Kong residents.
Reorient Financial Markets, a wholly-owned unit of Yunfeng and JPMorgan acted as Yunfeng’s financial advisors on the deal, while Citigroup advised MassMutual International, the statement said.