(Bloomberg) -- Fosun International Ltd. shares, which were suspended on Friday after a report that Chairman Guo Guangchang had gone missing, plunged by the most in almost four months after resuming trading on Monday.
The shares closed 9.5 percent lower at HK$12.08 in Hong Kong, the biggest decline since Aug. 24. Chinese billionaire Guo was back at work after aiding authorities with an investigation and attended an internal conference on Monday, according to people familiar with the matter. Caijing magazine earlier reported that Guo had returned home.
Guo, 48, who describes himself as a student of Warren Buffett, has built a global empire spanning everything from insurance and holiday resorts to entertainment through dozens of deals over the years. Shares of Shanghai Fosun Pharmaceutical Group Co., one of several Guo-related companies halted on Friday, also plunged on Monday in a sign that investors remained jittery about the broader implications for the firms.
“Mr. Guo has been instrumental to the development of Fosun and the company’s recent strategy to expand into financial services, notably insurance,” Hong Kong-based Standard & Poor’s analyst Lawrence Lu wrote in a note Monday. Lu didn’t change his rating on the firm, citing a limited impact from the situation so far. An extended investigation of Guo, if it happened, could affect Fosun’s access to funding and acquisitions the firm is yet to complete, Lu wrote.
Ratings Cut
Shao Ziqin, a Shenzhen-based analyst at Citic Securities Co., cut Fosun International’s rating by two levels to hold from buy. Slower growth prospects amid uncertainties and a lack of investment opportunities limit Fosun International’s upside for valuations, analysts led by Shao wrote in a report Monday. The analysts expect Fosun to make no new insurance-related acquisition in the near future.
Fosun International’s 6.875 percent bonds due in 2020 rose 6.4 percent to 97.9 cents on the dollar as of 4:20 p.m. in Hong Kong, according to data compiled by Bloomberg. The bonds had tumbled by a record on Friday. Shares of Shanghai Fosun Pharmaceutical plunged 12 percent to close at HK$21.90 in Hong Kong, a five-month low.
Assisting Probe
Guo was assisting with an investigation into former Shanghai vice mayor Ai Baojun, people familiar with the situation said Friday. Ai was “suspected of severe violations of party discipline,” the Central Commission for Discipline Inspection said on its website last month, using language that often refers to corruption probes.
On a conference call Sunday, Fosun International President Wang Qunbin said he remains confident of the company’s cash flow and future, and said that the probe is most likely related to “personal matters.”
Fosun management and board members will consider repurchasing shares “when necessary,” Wang said on Sunday.
Guo appeared briefly at an internal annual conference in Shanghai Monday morning, according to local newspaper China Business News. Guo delivered a short welcoming speech, the newspaper said, including a photo of Guo standing at a lectern.
Chinese Roots
“The growth of Fosun, in essence, is rooted in China,” Guo was quoted as saying by China Business News. “Our investments are worldwide, but our foundation remains in China.” Guo didn’t mention the investigation, according to a speech transcript published by the newspaper.
“Investor concerns won’t be completely cleared,” until the company gives more information, Capital Securities Corp. analyst Yan Yongzheng said in Shanghai. “But the fact that Guo is showing up physically is a positive sign.”
Guo’s conglomerate spent $5.7 billion over two years acquiring insurance assets, according to data compiled by Bloomberg. The insurance businesses, such as Portugal’s Cia de Seguros Fidelidade Mundial SA and Bermuda-based
Ironshore Inc., provide low-cost funding for acquisitions in other industries.
Fosun International has $2 billion of acquisitions announced this year that haven’t been completed. The company is competing for Anglo-German banking group BHF Kleinwort Benson Group and agreed to acquire Israeli insurer Phoenix Holdings Ltd. in June.
Israeli regulators on Sunday halted the approval process for the acquisition, according to local media Calcalist. Fosun representatives will come to Israel in coming days to hold meetings about Phoenix Holdings’ sale process, according to a Tel Aviv bourse filing.
Bloomberg News
--With assistance from Annie Lee and Zhang Dingmin
