Media Coverage

Prudential puts $500m in China fund

Resource:FT.com

Prudential Financial, the US insurance group, has agreed to invest $500m in a new Chinese private equity fund run by Chinese conglomerate Fosun Group that will focus on buying faded western brands and bringing them to the Chinese market.

 

Fosun will contribute $100m of its own money to the fund, which will be on the lookout for investments similar to the one Fosun made in Club Méditerranée last year, when it bought nearly 10 per cent of the holiday resort company with a plan to revive its image and upgrade its China strategy.

 

As manager of the fund, Fosun is particularly interested in famous luxury clothing, shoe and fashion brands that have fallen on hard times but could be resuscitated by tapping into the booming Chinese consumer market through Fosun’s extensive network of subsidiary companies.

 

Fosun claims to be the largest privately-owned conglomerate in China, with subsidiaries in the pharmaceutical, mining, steel, property development, retail and finance sectors.

 

The company launched a $100m joint venture private equity fund with the Carlyle Group in Shanghai last year, marking the start of its foray into managing other people’s money on a large scale, according to Fosun chairman Guo Guangchang.

 

For Prudential, this will be the single largest investment fund given to a third party to manage in the company’s 135-year history.

 

Mark Grier, Prudential vice-chairman, said the US company found Fosun’s “theme of overseas brands matched with Chinese power” very attractive. “The Club Med deal is a good example of what this fund can do – investing in global brands that can do better with Fosun’s help by expanding in China,” he said.

 

Mr Guo said part of Fosun’s motivation for partnering with Prudential was that as well as being “the second-largest insurance brand in the US” it was “one of the few US financial companies that did not require government assistance during the financial crisis”.

 

He said the new fund, denominated in US dollars, will be managed completely separately from Fosun’s Carlyle venture and will probably devote about half its energy to investing in foreign brands and half to investing in domestic Chinese companies.