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* Country Garden , China Life, others keen on Dah Sing
asset-bankers
* Dah Sing has put up insurance business for strategic
review
* Chinese firms eager to diversify country, currency
risks-banker
By Denny Thomas
HONG KONG, Feb 4 (Reuters) - Property developers and other
Chinese firms have shown strong interest to bid for the $1
billion insurance asset of Hong Kong's Dah Sing 0440.HK as
they seek diversification from a slowing mainland economy and a
weakening yuan, sources with direct knowledge of the matter
said.
The Chinese companies have been very enthusiastic even
though some have little or no insurance-sector experience, said
the sources. China's fourth-biggest developer, Country Garden
Holdings 2007.HK , and its biggest insurer, China Life
601628.SS , are among those that have flagged their interest,
they added.
Since Dah Sing Financial Holdings announced a strategic
review of the business on Jan. 12, the company and its adviser,
Citigroup (N:C) C.N , have received indications of interest from more
than 20 Chinese companies, two sources familiar with the sale
process told Reuters.
"There is a strong desire among Chinese companies to
diversify their country risk and the currency risk," one of the
sources said.
Global and regional insurers, including Sun Life Financial
SLF.TO , Prudential plc PRU.L , Metlife Inc MET.N and AIA
Group 1299.HK , have also expressed a desire to join the
bidding race, the sources said.
The identities of the other interested Chinese companies
could not be determined. It is not clear which companies will
make formal bids.
Country Garden, Prudential, Metlife, Sun Life, AIA and
Citigroup declined to comment. China Life did not respond to
requests for comment.
Dah Sing did not reply to a request for comment but had said
last month a number of options are under the group's
consideration as part of the strategic review and that no
timetable had been set for its completion.
The sources did not want to be identified because the sale
process is confidential.
CAPITAL OUTFLOWS
The Chinese interest showcases a broader problem for the
world's second-biggest economy. While its government has been
supportive of companies' overseas M&A drive, a surge in outbound
purchases, which hit a record $116 billion last year, undercuts
Beijing's efforts to tackle its capital-outflow problems.
China has suffered about $700 billion in capital outflows
last year, amid a stock market turmoil and a shock currency
devaluation. Authorities have tried to stem the outflows by
intervening heavily in the market and clamping down on various
channels to take money overseas.
Chinese corporations have launched another $60 billion worth
of deals in 2016, including ChemChina's record $43 billion
agreed bid for Swiss seeds and pesticides group Syngenta
SYNN.VX on Wednesday, making it the best start to a year on
record.
Bankers say their China outbound M&A pipeline is strong and
many are betting on another bumper year, which will only add to
Beijing's nervousness about capital outflows.
"We aren't seeing deals being impacted by capital controls
issues," said the head of M&A at a Wall Street investment bank.
"On the contrary, we are seeing more new clients showing
interest in buying overseas assets," the person said, adding
that his team spends about 70 percent of its time on China
deals.
The Chinese suitors' aggressive overseas M&A push could lead
to them overpaying for assets or make their global rivals pay
top dollar to win bids.
"In an attempt to pre-empt Chinese competitors from
acquiring their way into a foreign market, global corporations
may end up paying too much in the counter-bidding," said Howard
Yu, professor of strategic management and innovation at IMD,
Geneva.