China’s Fosun aims to sell $11 billion in assets next year

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(Bloomberg) – One of China’s largest non-state conglomerates has told analysts it aims to sell up to $11 billion in assets over the next 12 months, as part of efforts to strengthen at both its balance sheet and investor confidence.

The management of Fosun International Ltd. said in a Monday briefing that it plans to shed 50 billion to 80 billion yuan of non-core assets as it strives to focus on its consumer discretionary business, Citigroup analysts wrote Inc., including George Choi. report. The conglomerate considers its main assets to be its publicly listed pharmaceutical, retail and tourism arms as well as insurer Fidelidade, according to the investment bank.

Shanghai-based Fosun, whose business spans from resort chain Club Med to French fashion house Lanvin, has come under intense scrutiny from investors over its liquidity since Moody’s Investors Service wrote in June on corporate funding pressures. The credit assessor put Fosun on watch for further downgrade on Sept. 30, citing “high rollover risk.”

Moody’s downgraded its rating further into junk territory on Tuesday, saying Fosun has low liquidity at the holding company level and insufficient cash to cover debt maturing in the next 12 months. Moody’s ratings are now unsolicited, he said. Fosun revealed earlier this week that it had notified Moody’s to end its business cooperation and had stopped providing the rating company with relevant information.

Fosun’s dollar stocks and bonds have fallen sharply since the June report amid concerns over debt repayments by the company and other high-yield borrowers in China. Some of Fosun’s ratings are below 50 cents on the dollar, well into troubled territory. Its stock has fallen more than 40% this year, recently hitting levels not seen in a decade. Stocks and shorter-term bonds in Fosun rose on Tuesday, outpacing markets overall.

The company held the analyst briefing just days after announcing a pending deal to sell its majority stake in the parent company of a Chinese metals company for up to 16 billion yuan (2.2 billions of dollars). The completion of the divestiture “will allow Fosun to redeploy its resources to better uses,” Citi’s Choi wrote.

Bloomberg reported on Tuesday that Fosun is reviewing its stakes in European financial institutions as the company explores a way to raise funds for debt repayment, according to people familiar with the matter.

Fosun management said at Monday’s analyst meeting that the company aims to gradually repay outstanding senior notes and increase bank borrowing, according to the Citi research report. He added that Fosun recently entered into strategic agreements with Industrial and Commercial Bank of China Ltd. and HSBC Holdings Plc, two of Asia’s largest lenders.

Fosun’s external public relations had no immediate comment when reached on Tuesday and an email to Fosun’s investor relations department did not receive an immediate response.

(Updates with downgrade in fourth paragraph and review of some European holdings in seventh paragraph.)

©2022 Bloomberg LP

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