Ping An Insurance (Group), China’s largest insurer by market value, will consolidate its local operations under one roof and keep its sight on Greater Bay Area growth potential, according to co-chief executive Jessica Tan Sin-yin.
The new base will be located in Kowloon, where the insurer agreed to pay HK$11.27 billion (US$ million) in April for 30 per cent of the office space atop the West Kowloon high-speed railway station from Sun Hung Kai Properties (SHKP) and the controlling billionaire Kwok family.
“The investment shows our long-term commitment to Hong Kong,” Tan said in an interview. “Despite what has happened in the past year, we still believe in the future of Hong Kong as an international financial centre and its important role in the Greater Bay Area.”
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Ping An intends to house the business of its Hong Kong subsidiaries and lease out extra space to other third parties for long-term investment income, Tan said in a phone interview with the South China Morning Post earlier this week.
SHKP outbid three rival groups of developers to win the tender of the site in November with a record HK$42.2billion bid. It was the largest commercial land parcel ever sold by the city’s government, equivalent to 47 Olympics-sized swimming pools.
The whole plot can be built into 3.17 million sq ft of gross floor area for retail, office or hotel use, or about 12 per cent more than the space in nearby International Commerce Centre, Hong Kong’s tallest skyscraper. The project is expected to be fully developed over five years.
The group’s investment in Hong Kong real estate market is an endorsement of the city’s future at a time when the outlook was marred by months of anti-government protests. The insurance has continued to expand its footprint amid the controversial implementation of the national security law in late June.
Hong Kong could also become the springboard for the insurer’s international forays, according to Louis Tse Ming-kwong, managing director at VC Asset Management.
“Ping An’s headquarters in Shenzhen can focus on mainland businesses while its [future] Hong Kong headquarters can help build up its international brand,” he added. “Other international insurers such as AIA, Manulife also have their own [regional] headquarters in Hong Kong.”
Apart from property investment, Ping An Insurance is also betting on getting a slice of the banking business through its Ping An OneConnect Bank, one of the virtual banks licensed by the Hong Kong Monetary Authority as part of its support for fintech innovation.
The virtual bank conducted its trial run in June, trailing other upstarts such as ZA Bank, Livi and WeLab Bank. The group’s wealth management unit under Lu International (Hong Kong) began operations this month. Both are new additions to its existing securities and insurance businesses in the city.
The group nevertheless has suffered this year along with the broader economy. It reported a 30 per cent drop in earnings to 68.7 billion yuan (US$10 billion) in the first half, with the coronavirus eroding income from its insurance, banking and trust businesses. Its assets stood at 8.8 trillion yuan on June 30.
Hong Kong’s economy has contracted in four straight quarters through June, its worst recession on record.
Tan sees a lot of linkages between Hong Kong and its mainland base in Shenzhen that can benefit the group in terms of extracting the benefits from China’s blueprint for the Greater Bay Area, an economic region that includes nine cities in southern Guangdong province, Macau and Hong Kong.
Authorities on both sides of the border have recently unveiled plans to promote cross-selling of insurance and wealth-management products in an extension to the so-called “Connect” schemes, after the success in stock and bond programmes.
“We have a lot of operations in Shenzhen and other cities in the Greater Bay Area,” she added. “We will integrate our Hong Kong and our mainland business in the bay area to achieve further business growth.”
More from South China Morning Post:
- Insurers Ping An, China Life vow to further develop online sales after coronavirus pandemic eats into first-half earnings
- Ping An’s Lu wealth management unit offers two zero-commission months on Hong Kong launch, might ignite price war
- Fintech unicorn Lufax, backed by China’s biggest insurer, Ping An, said to be secretly applying for US IPO
- Ping An Insurance’s Peter Ma Mingzhe steps down as he hands over the reins to three co-CEOs
- Sun Hung Kai, Kwok family sell 30 per cent stake in office space at Hong Kong’s most expensive commercial site to Ping An Life for US$1.45 billion
This article Ping An Insurance sees Hong Kong as pivotal base for expansion in Greater Bay Area, co-CEO says first appeared on South China Morning Post