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Fosun wants another piece of China’s new wealth

By NexChange
Capital Markets

China’s richest man Wang Jianlin memorably lost $3.6 billion as the share price of his Dalian Wanda Commercial Property flagship sank on “Black Monday” (24 August). But, we shouldn’t forget that China is producing more and more millionaires each year. They want to spend their new wealth on luxuries and also invest it for big, long-term returns.

Fosun International, the Shanghai conglomerate, knows its customers. It has already profited from supplying expensive pharmaceuticals and healthcare, offering up vacations at its Club Med resorts and entertainment at Cirque du Soleil.

It now plans to buy small European private banks that are being squeezed out by the mighty wealth management operations run by titans such as UBS and Credit Suisse.

Fosun is close to inking a deal to buy German private bank Hauck & Aufhauser for $233 million, has made an offer to purchase half of Belgium’s BHF Kleinwort Benson and is pursuing Portugal’s Novo Banco.

“We see that a lot of China’s middle class are looking for investments overseas, and if we have private banks we can offer wealthy Chinese families…direct access to [overseas] personalized financial products,” chief executive Liang Xinjun told The Wall Street Journal.

It makes sense. The number of millionaires in China soared at a rate of 17% last year and the size of their chest of investible assets by 19%, according to the 2015 World Wealth Report by Capgemini and RBC Wealth Management.

Sure, they were helped by 52% rise in Shanghai’s CSI300 stock index – and like Wang, many have recently taken a hit. But, all the more reason to diversify into less volatile assets.
Photo: Dan Kristiansen

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