Fosun Group, Prudential Financial Expand Alliance

NEW YORK (The Deal) -- China's Fosun Group, the parent company of acquisitive conglomerate Fosun International, announced an agreement Wednesday to forge a China-focused real estate joint venture with Prudential Financial (PRU).

The joint venture plans to invest in mixed-use development projects in growing urban centers in China and also anticipates working on real estate projects outside China. The companies said they would also develop together a range of products, services and educational resources for Chinese individuals and families planning for retirement, though it wasn't clear whether they would do this through the new joint venture.

Fosun and Newark, N.J.-based Prudential, which does business as Pramerica in certain countries outside the United States, have been working together since 2011, when they launched the $600 million Pramerica-Fosun China Opportunity Fund.

They also have a 50/50 life insurance joint venture in Shanghai, and a joint U.S.-based investment fund.

"In a very short time, [Prudential] has become an important strategic partner for Fosun, as we expand our global footprint," Fosun Group Chairman Guo Guangchang in a statement. Wednesday's news follows concerns that Hong Kong-listed subsidiary Fosun International, the self-styled Berkshire Hathaway (BRK.A) of China, may be stretching itself too thin financially with a planned 1 billion ($1.36 billion) Portuguese acquisition.

In that transaction, Fosun International will buy 80% of the insurance arm of Caixa Geral de Depositos SA from the Portuguese state. It beat rival bidder Apollo Global Management LLP in a hotly contested auction earlier this month, but has yet to disclose terms and conditions as well as how it plans to fund the purchase.

The funding uncertainty over the Portuguese deal prompted Moody's Investors Service to place Fosun International's ratings under review for a possible downgrade.

"The consideration for the transaction exceeds Fosun's cash resources and internally generated cash," warned senior Moody's analyst Lina Choi last week.

"We therefore expect that the company will need external funding, dispose some of its investments, or both."

Fosun International's activities include steel, property, pharmaceuticals and healthcare, and mining. The company was listed on the Hong Kong Stock Exchange in 2005. It is 58% owned by chairman Guangchang. He and three other co-founders indirectly hold 79.03% of the company.

The conglomerate has been investing in Europe for some time, taking a first stake in French holiday resort operator Club Mediterranee SA in 2010 before launching a joint bid with the-then AXA Private Equity, since renamed Ardian, last year for majority control of the company with an offer valuing Club Med at 553 million.

Fosun International also owns 13.4% of Greek jewelry and fashion company Folli Follie Group, which is controlled by Swiss airport retailing company Dufry AG.

In the U.S. Fosun International paid $725 million for the 2.2 million-square-foot Chase Manhattan tower last October in the largest-ever purchase of a New York building by a Chinese company.

More from Mergers and Acquisitions

Sprint, T-Mobile Might Have to Do More Than Make Promises to Get Deal Approved

Sprint, T-Mobile Might Have to Do More Than Make Promises to Get Deal Approved

Xerox Received Interest From HPQ Before Fuji Deal: Sources

Xerox Received Interest From HPQ Before Fuji Deal: Sources

Divestitures at Newell Expected in Weeks: Wells Fargo

Divestitures at Newell Expected in Weeks: Wells Fargo

In Biopharma M&A, 'Where There's Real Innovation There's Someone Willing to Pay'

In Biopharma M&A, 'Where There's Real Innovation There's Someone Willing to Pay'

AT&T Expert Calls DOJ's Model 'Theoretically Unsound'

AT&T Expert Calls DOJ's Model 'Theoretically Unsound'