Ping An Ramping Up Outbound Deals by 500%, Has $22.5B to Spend

Ping An Insurance is already one of China’s biggest cross-border buyers of real estate, but the mainland financial giant now says it could raise its overseas property holdings by as much as 500 percent within five years, as investment returns become harder to find in other areas.

Having already invested in properties in Australia, Japan and the US, Ping An also says that it is willing to do further deals in the UK, even in the aftermath of the recent Brexit decision, according to a recent interview with Reuters.

Should Ping An follow through on its plans, the mainland financial services company could hold more than $27.5 billion in overseas real estate by 2021.

Moving $22.5 Billion Overseas in Five Years

China limits its insurance companies to investing no more than 15 percent of their assets overseas, but Ping An, which is China’s second-largest insurer by market value, to date has only moved around two percent of its total holdings into assets outside the mainland. According to the company’s top financial executive, however, Ping An could increase that overseas allocation to up to ten percent in the near future.

“That could even happen in the next three to five years as the world is changing very fast,” Ping An CFO Jason Yao told Reuters.

In terms of insurance assets, Shenzhen-based Ping An had more than $275 billion in holdings at the end of the most recent financial period. To reach a ten percent overseas distribution in its portfolio, the Shanghai-listed company would need to move as much as $22.5 billion overseas by 2021, even if its total assets remain frozen at last year’s levels and it confined its investments to only its insurance funds.

In the case of Ping An’s US investments so far, which last year alone included a $1 billion investment in a warehouse portfolio, as well as a $500 million joint venture Boston commercial development with China Life and Tishman Speyer, the financial conglomerate has used funds from its trust division, which are not part of its insurance balance sheet.

Ping An also hit the headlines in the US last Friday as it joined with a host of Chinese companies, including Greenland Group, Agile Group and Poly Sino Capital to buy a site in South San Francisco for a $1 billion business park development. That California project was also executed through Ping An’s trust division.

US, UK and Europe All Top Targets for Ping An

While Ping An has been doing deals in the US, its first overseas acquisitions were in the UK, and the Chinese insurer refused to rule out Great Britain for future deals, even after the Brexit added some extra risk considerations.

“There will be investment opportunities in the UK … Britain’s stock market and currency have gradually stabilised (since the vote). We’ve been watching that very closely,” Yao reportedly told Reuters, saying that the Brexit vote was not an issue.

Ping An was one of the pioneers of big outbound deals from China when it made the ₤260 million acquisition of the Lloyd’s of London building in London its first overseas deal in July 2013. The company followed by acquiring Tower Place in the city’s insurance district for ₤327 million (then $490 million) in January 2015.

In terms of sector, Ping An’s interests appear to be consistent with its past purchases, with Yao indicating that it was looking for acquisitions in property, logistics-related real estate and private equity funds. The insurers interest in alternative investment classes follows a 54 percent fall in its investment returns in the first half of 2016, which it attributed to falling interest rates and a stagnant stock market on the mainland.­