Fosun Chairman’s Troubles Raise Doubts about Bids for Israeli Insurers

By Sharon Wrobel and David Wainer | December 14, 2015

The protracted sale process of two of Israel’s largest insurance providers faced further setbacks on Sunday as concern grew over a Chinese probe into Fosun International Holdings Ltd.

Fosun’s troubles represent the latest setback for Delek Group Ltd., which needs to sell its stake in Phoenix Holdings Ltd. to comply with a law passed in December 2013 that prohibits Israeli companies from owning financial services corporations as well as industrial businesses. An accord last year to sell Delek’s stake in Phoenix to U.S. company Kushner Funding LLC also fell through.

The Chinese investment giant had agreed in June agreed to buy insurer Phoenix; however, Caixin magazine reported that its billionaire Chairman Guo Guangchang had gone missing, and, as subsequently reported, is assisting judicial investigators. Fosun stock plunged 16 percent in New York over-the-counter trading on Friday.

As a result Dorit Salinger, Israel’s capital markets regulator, will probably reconsider Fosun’s purchase of Phoenix and Chinese bids for Clal Insurance Enterprises Holdings Ltd., said Meir Slater, head of research at Bank of Jerusalem Ltd. in Tel Aviv.

Salinger halted the approval process for Fosun’s permit to acquire Phoenix, the Hebrew daily Calcalist reported on Sunday.

“Salinger had been waiting for a reason not to have to approve this deal,” said Bank of Jerusalem’s Slater. “The recent development with Fosun may give her the excuse she needed. The regulator prefers to leave key insurance assets in Israeli or Western hands as it is concerned about the risk involved in the exposure to China and difficulty in regulating the assets. The situation with Fosun also calls into question the sale of Clal Insurance to potential Chinese bidders.”

Fosun representatives will visit Israel in the “coming days” to discuss the Phoenix sale, Delek said in a statement to the Tel Aviv bourse. A spokeswoman for IDB Development Corporation, which is in talks to sell its stake in Clal to Chinese buyers, declined to comment.

Delek Group, which owns more than 52 percent of Phoenix, fell 4.5 percent at the close in Tel Aviv while Phoenix stock dropped 3.1 percent. Clal Insurance fell 5 percent to the lowest since December 2014.

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