Jack Ma just rubbed his lamp again. Through his various financial holdings, the chairman of Alibaba Group Holding Ltd. (BABA) has teamed with Singapore government wealth fund GIC Pte. Ltd. to buy control of MassMutual Asia Ltd., in a cash and paper deal valued at $1.7 billion.
Massachusetts Mutual Life Co.'s international unit MassMutual International LLC agreed to sell the Hong Kong-based Asia business to a combine made up of Jack Ma-backed Yunfeng Financial Group Ltd, GIC-managed City-Scape Pte. Ltd. Alibaba-affiliate Ant Financial Services Ltd. and other Asian investors. MassMutual International will receive HK$7.9 billion ($1.01 billion) in cash and 800 million of Yunfeng's Hong Kong-listed shares at HK$6.50 per share. That's the equivalent of about 24.8% of Yunfeng's share capital.
The news propelled Yunfeng to an intraday high of HK$8.20 on Friday, Aug. 18, up 30% compared with the previous close of HK6.28. By the end of trading Friday, it had fallen back to HK$6.62.
Yunfeng will directly own 60% of MassMutual Asia while the other investors, including Ant Financial, which is indirectly controlled by Ma and in which Yunfeng is also an investor, will own the remaining 40%.
"We will continue to participate in the growing and attractive Asian markets through our ongoing stake in the combined Yunfeng FG and MassMutual Asia business," said MassMutual chairman, president and CEO Roger Crandall in a statement. "The resulting company will be a full-service financial services firm, well-equipped to serve a wide range of customers, including high net worth individuals and an emerging universe of consumers with rising incomes."
Yunfeng said its long-term plan is to leverage its fintech capabilities to develop what it called a financial ecosystem, including information technology and online and offline platforms offering financial services, products and advice.
"This transaction is a milestone step of Yunfeng FG becoming a financial conglomerate, integrating its existing fintech focused financial services with traditional insurance business," said Yunfeng chairman Yu Feng.
MassMutual Asia has two primary subsidiaries: MassMutual Insurance Consultants Ltd., which manages general insurance business, and MassMutual Trustees Ltd., which focuses on the Mandatory Provident Fund business, a compulsory pension plan for the retirement of residents in Hong Kong. It also has an office in Macau, the former Portuguese enclave on the opposite side of the Pearl River estuary from Hong Kong.
MassMutual International said its Japanese business and joint venture in China are not part of the deal.
A Hong Kong regulatory filing, in which Ma figures using his Chinese name Ma Yun, shows the complex web of cross holdings between the buyers. Ma is a 29.85% holder in Yunfeng Financial Holdings Ltd., an indirect corporate controlling shareholder of Yunfeng Financial Group , whilst the remaining 70.15% is held by Yu Feng. Yu and Ma are also the shareholders of Yunfeng Capital, a private equity firm. Yu owns 60% of Yunfeng Capital, while Ma holds the remaining 40%.
GIC Capital and some of the other members of the consortium are also investors in Yunfeng Capital's funds.
Besides Ant Financial, which will hold 5% of MassMutual Asia through a wholly owned subsidiary API (Hong Kong) Ltd., and City-Scape, with 7.5%, the other members of the buyer group are financial investment holding Meyu International Co. Ltd., with 9.8%; Sheen Light Development Ltd., a private investment holding of pharmaceuticals entrepreneur Baoguo Zhu, with 5%; online media company Sina Corp. (5%); Harvest Billion International Ltd., an investment vehicle of sports and fashion retail tycoon Chen Yihong (4.9%) and Giant Investment (HK) Ltd., with 2.8%.
Yunfeng subsidiary Reorient Financial Markets Ltd. and JPMorgan Chase & Co. served as Yunfeng's financial advisers. Yunfeng's legal adviser was Simpson Thacher & Bartlett LLP. The Simpson Thacher team was led by Celia Lam.
Citigroup Global Markets Inc. served as MassMutual International's exclusive financial adviser on the transaction. MassMutual International's legal advice was from Skadden, Arps, Slate, Meagher & Flom LLP.
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