Group Led by Yunfeng Financial to Buy MassMutual’s Asia Unit for $1.7B

By and | August 18, 2017

A group led by Yunfeng Financial Group Ltd., the company backed by billionaire Jack Ma, agreed to buy an Asian unit from Massachusetts Mutual Life Insurance Co. to add insurance products to the array of financial services it offers to clients.

The consortium, which includes Sina Corp., Giant Network Group Co., Ant Financial, a GIC Pte-managed entity and others, will pay HK$13 billion ($1.7 billion) for Hong Kong-based MassMutual Asia Ltd., the seller said Thursday in a statement. Yunfeng will own a 60 percent stake in MassMutual Asia, with the other investors holding the remaining interest. Yunfeng shares surged by the most in more than a year.

Yunfeng, which is known for catering to wealthier individuals, has been broadening its reach, creating a robo-adviser to help manage the wealth of regular Chinese and Hong Kong investors. The business being acquired posted premium income of HK$6.88 billion last year, the buyer said in a separate statement.

“MassMutual Asia’s insurance products will broaden Yunfeng FG’s financial product offerings and significantly contribute to the building of its financial service ecosystem, given that insurance and annuity products are indispensable in overall financial planning,” Yunfeng Chairman David Yu said in the statement. “This transaction will also enable cross-referrals of existing customers of Yunfeng FG and MassMutual Asia, thereby facilitating a wider customer reach.”

Yunfeng shares soared 19 percent in Hong Kong, the most since May 2016, bringing its gains this year to 36 percent. MassMutual, based in Springfield, Massachusetts, is owned by its policyholders.

Under the terms of the transaction, Yunfeng will pay HK$7.86 billion for its stake, about HK$5.2 billion of which will be paid for through stock. The remaining HK$2.66 billion will be paid through the issuance of interest-free installment note or cash.

‘Significant Step’

MassMutual, founded in 1851, has been reshaping its business mix under Chief Executive Officer Roger Crandall. The company has been seeking to expand in asset management and added a network of thousands of advisers in a deal last year with MetLife Inc.

“This transaction represents a significant step forward for MassMutual and its policyowners by affording us the distinct opportunity to capitalize on the long term success and value of MassMutual Asia,” Crandall said in the statement. “We will continue to participate in the growing and attractive Asian markets through our ongoing stake in the combined Yunfeng FG and MassMutual Asia business.”

Ma is the founder of Alibaba Group Holding Ltd., which created China’s largest online bazaar.

JPMorgan Chase & Co. was the banker for the buyer, which got legal advice from Simpson Thacher & Bartlett, according to the seller’s statement. MassMutual used Citigroup Inc. and Skadden, Arps, Slate, Meagher & Flom.

MassMutual said its operation in Japan and a joint venture in China aren’t part of the transaction. MassMutual Asia, wholly owned by MassMutual since 2000, has offices in Hong Kong and Macau, the firm said in an emailed statement. One of its primary units in Hong Kong manages mandatory retirement fund contributions and the other operates a general insurance business. It had 350 employees as of July 1, with an agency force of about 3,000 and 450 advisers.

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