HONG KONG, June 7, 2024 - (ACN Newswire) - On 28 May, Fosun International issued an announcement on the Hong Kong Stock Exchange announcing the sale of 99.743% of its subsidiary’s shares in the German private bank, Hauck Aufhäuser Lampe Privatbank AG (HAL), to ABN AMRO Bank for a total consideration of approximately EUR670.3 million. Upon the completion of this transaction, Fosun International will no longer hold shares in HAL, but will fully retain the shares of Hauck & Aufhäuser Fund Services S.A. (HAFS) held by HAL, i.e. retain HAL’s asset servicing business.
A company’s business operations are typically comprised two elements: strategic planning capabilities and tactical execution capabilities. The former determines the direction, while the latter affects its development.
Fosun’s decision in selling HAL stems from its foresight in the globalization era. Additionally, Fosun’s robust global operational capabilities enable it to help subsidiaries optimize their asset portfolios and cultivate high-quality assets to unlock value.
Let’s take a closer look at how Fosun had deeply tapped into the value of this German private bank, how Fosun had empowered HAL to create a win-win situation, and how HAL had aligned with Fosun’s evolving globalization strategy.
Fosun’s globalization 1.0 - Beginning: “Combining China’s Growth Momentum with Global Resources”
The globalization journey of Fosun started with its listing in 2007, when globalization was on the rise and Chinese companies were eager to go global and invest overseas.
To advance its globalization strategy, Fosun proposed “Combining China’s Growth Momentum with Global Resources”, helping Chinese companies go global while also assisting overseas companies to benefit from China’s rapid growth.
In 2016, Fosun acquired H&A (renamed HAL in 2021). Guo Guangchang, Chairman of Fosun International stated at the time that “The bank aligns with our long-term value investment philosophy and provides us with better access to Europe’s leading economies. We believe through this cooperation, we can not only serve the local German population, but also help H&A expand its reach to more Chinese corporate and individual clients and meet their overseas financial needs. This is also a manifestation of Fosun’s globalization strategy of ‘Combining China’s Growth Momentum with Global Resources’.”
The then-Chairman of H&A Supervisory Board and Shareholder Committee, Wolfgang Deml, said, “The majority of shareholders chose Fosun, an investor with strength and long-term vision, which will allow H&A to maintain its traditions and culture while gaining a fresh international perspective. Fosun’s global network and deep understanding of the financial industry will help us grow our business and acquire new clients.”
In fact, the acquisition of H&A was not only another practical implementation of Fosun’s globalization strategy of “Combining China’s Growth Momentum with Global Resources”, but also an important step for Fosun to firmly establish a presence in the high-end wealth management market.
Data shows that when Fosun acquired H&A, H&A had a total of approximately EUR43.0 billion in assets under administration (including EUR8.0 billion in assets under management (AUM) and EUR35.0 billion in assets under custody (AUC)), and a net profit of EUR5.20 million in 2014.
Fosun’s globalization 2.0 - Deepening: “Mutual Empowerment between China and the World”, empowering H&A’s M&A integration and geographic expansion
After acquiring H&A, Fosun’s globalization journey entered a 2.0 phase. The core issues were how to further increase scale through M&A, achieve effective integration, leverage scale to drive organic growth, thereby allowing H&A to fully harness the advantages of Fosun’s globalization strategy, accelerate business upgrades and transformation.
In retrospect, Fosun’s in-depth operational management, as well as its support for HAL to continuously pursue M&A integration, have been extremely successful in terms of mutually empowering HAL’s business development, globalization journey, and other aspects. In 2023, HAL’s revenue amounted to EUR435 million; net profit was RMB83 million; assets under administration reached EUR265.213 billion, ranking among the top 10 private banks in Germany.
Guo Guangchang said, “A successful investment must be followed by successful integration in order to realize the target investment value.” Therefore, after the integration of H&A, Fosun began to increase its business scale, expand its business presence, and deploy new technologies and new fields through investment and M&As, so as to enhance its organic growth momentum.
It is understood that HAL’s acquisition of Sal Oppenheim, Deutsche Bank’s Luxembourg-based asset custodian platform, in 2017 accelerated the development of its asset custodian business. The acquisition added over EUR20.0 billion in AUC to its existing AUC of more than EUR40.0 billion and enhanced HAL’s brand recognition and market influence, which in turn reinforced its organic growth. In the six years since the acquisition and integration, the organic growth had developed at an annualized rate of approximately 30%. By 2023, the scale of AUC exceeded EUR200.0 billion, placing HAL among the top three asset servicing business providers in Luxembourg.
In terms of geographic expansion, HAL acquired Ireland’s CCM asset servicing platform in 2019 to enter the English-speaking market and kick off its internationalization strategy. At the same time, as the Chinese wealth market rose rapidly, Fosun brought HAL, a high-quality overseas brand and its products to China, helping it develop the Chinese market and leveraging China’s rapid growth to drive its global business. Fosun supported HAL to successively establish branches in Nanjing and Shanghai, fully launching its China business.
In 2021, Fosun empowered H&A to achieve a qualitative leap in its M&A history. Fosun supported H&A in acquiring the leading German private bank Bankhaus Lampe KG, and after the merger, it was renamed HAL. After the integration, the scale effect initially emerged. This acquisition drove HAL’s wealth management business’ assets under management to exceed EUR17.0 billion, making it one of the top 10 private banks in Germany. Michael Bentlage, CEO of HAL also mentioned in a media interview that “this merger is a ‘real success’ for the company, as before acquiring Bankhaus Lampe, we ranked 20th in the German market.”
Overall, after the M&A integration, HAL’s revenue and market ranking have enhanced significantly. For private banking, asset management, and custodian businesses, a larger scale and higher ranking make it easier for the bank to qualify the white list of more customers, helping with organic client acquisition. Furthermore, after the M&A integration, HAL can achieve scale effects in IT, risk control, compliance, and other operational projects, reducing its operating costs, optimizing the cost-income ratio, and enhancing its profitability. The German media DER PLATOW Brief reported that HAL’s cost-income ratio decreased to 71.6% in 2023 (from 76% the previous year), and the 70% target is now within reach, despite significant investments in technology and new employees.
Market analysts pointed out that the H&A’s series of acquisitions demonstrated Fosun’s continued upgrades to its global financial footprint, further validating its globalization capabilities and M&A investment and integration capabilities.
Fosun's Globalization 3.0 - Evolution: “Profound Global Operations”, empowering HAL's organizational optimization and further enhancing innovation capabilities
Since 2022, Fosun has continued to evolve its globalization strategy - the “Combining Global Growth Momentum with Global Resources, Global Organization + Local Operations” model has been maturing, actively empowering its subsidiaries in business integration, product innovation, and ecosystem collaboration worldwide.
Fosun’s globalization journey has maintained steady development over the years. This is not only rooted in its incremental and far-sighted industrial development philosophy, but also underpinned by its philosophy of openness, mutual trust, win-win collaboration, strict compliance with local laws and regulations and respect for local culture.
“Talent” is Fosun’s most important and valuable asset. Therefore, an open, fair, and incentive-based talent employment philosophy also serves as the foundation of Fosun’s global operations. Fosun has also extended this global operational philosophy to HAL, empowering HAL’s systematic organizational reform through three dimensions: organizational structure, talent development, and corporate policy.
In terms of top-level organizational structure, Fosun had continuously gave suggestions to optimize the bank’s management structure, attached importance to internal talent cultivation and advised to promote two young executives into the core management team. In terms of incentive system guarantees, Fosun had provided comprehensive incentives to the management and core employees through options and virtual equity. In terms of globalization management, Fosun had assisted HAL in implementing a global rotation mechanism among Fosun’s financial companies worldwide, providing employees with a broader perspective. Based on the aforementioned support from Fosun and HAL’s mature talent management mechanism, HAL was named the Best Employer in Germany for consecutive years.
It is worth mentioning that the HAL management team fully recognized Fosun International’s globalization strategy. According to a mainstream German financial media Borsen Zeitung, the relationship between HAL and Fosun was constructive and characterized by trust. Fosun showed staying power as an investor and apparently understood HAL’s business best.
In addition to organizational optimization, Fosun is firmly committed to technology innovation as its core driver to achieve stable revenue and profit growth. HAL’s digital transformation is also progressing, with its online platform Zeedin winning the “Best Robo Advisory” award in Germany for consecutive years. In terms of innovative business, HAL acquired the digital currency custodian service provider Kapilendo in 2022, thus obtaining the subsequent digital custodian license issued by BAFIN and an initial business team, becoming one of the first banks in Germany with this license, and subsequently launching a comprehensive digital asset business line and digital asset management products.
Orderly investment and divestment creates a win-win situation
In addition to spending eight years meticulously cultivating and strengthening HAL to unlock its growth potential, Fosun also found the most suitable buyer, ABN AMRO Bank, to take HAL’s business to new heights. ABN AMRO Bank expects after deduction of one-off and integration costs, around EUR60 million of pre-tax run-rate cost synergies are expected to be achieved. The management of ABN AMRO Bank said at the announcement of the M&A that “This will not only generate cost synergies, but also bring mutual growth in the coming years.”
Upon the completion of this transaction, Fosun will fully retain the shares of HAFS held by HAL, i.e. retain HAL’s asset servicing business. HAL’s asset servicing business holds around EUR200 billion in assets under administration and is expected to consistently generate tens of millions of euros in annual profits, which aligns with Fosun’s objective of achieving long-term stable profits through asset-light operations, economies of scale, and ecosystem synergies. In addition, HAL’s asset servicing business can forge synergies with Fosun’s insurance, asset management and other financial businesses in Europe. In the future, Fosun will continue to invest in and maintain a close watch on the market opportunities for this business segment.
Furthermore, HAL will be able to unlock more value. Through the integration with ABN AMRO Bank, HAL can allocate more resources on the development of its banking business, thereby achieving a win-win-win situation.
Fosun, which is rooted in China and developing globally, has persistently upheld innovation and globalization as its two core growth drivers. It is one of the few domestic companies that is equipped with global operations and investment capabilities, and accumulated profound technology and innovation capabilities. As a representative of Chinese enterprises going global, Fosun has taken a unique path of industrial development through cross-border investment and M&As in its early globalization journey. From identifying excellent targets to bidding, operations, and eventual divestment, Fosun has encountered challenges in each step that needs its strategic foresight and excellent execution capabilities to stay ahead of the curve.
Fosun has combined its investment, operations and divestment strategies with its globalization strategy of “Combing China’s Growth Momentum with Global Resources - Mutual Empowerment Between China and the World – Profound Global Operations – Focusing on Innovation and Globalization” to realize a win-win situation for global and local operations, demonstrate its robust capabilities in empowering member companies and create win-win outcomes for all parties.
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