China’s ‘Warren Buffett’ said to be ‘assisting authorities’
Patti Waldmeir in Shanghai, Jamil Anderlini in Beijing and Malcolm Moore and Martin Arnold in London
Guo Guangchang
The tycoon who styles himself as China’s Warren Buffett has been caught up in an intensifying anti-corruption drive raising concerns throughout the country’s already nervous private sector.
Fosun International, China’s largest private conglomerate, said its chairman, Guo Guangchang, one of the country’s best-known businesspeople, was “assisting in certain investigations carried out by the mainland judicial authorities”. It did not say whether he was the target of the inquiry or was helping police gather evidence on someone else.
Analysis
Guo Guangchang: China’s self-styled ‘Warren Buffett’
Chinese billionaire captured global attention by buying some of the west’s best-known brands
Lex — Fosun International: 40 days to go
A storm is brewing around the conglomerate that will test its seaworthiness
His disappearance will fuel anxieties in the private sector that the anti-corruption crackdown launched by President Xi Jinping three years ago is being extended to high-profile entrepreneurs and the prime beneficiaries of China’s decades of rapid growth. It initially focused on ensnaring senior members of the government and military and financiers and is now broadening to prominent businesspeople in Shanghai.
Trading in Fosun’s shares was suspended on Friday following reports in the Chinese media that Mr Guo had been detained, prompting a wave of speculation. Fosun said it had applied to the Hong Kong Stock Exchange to resume trading on Monday.
His case threatens to accelerate the pace of capital flight out of China as the country’s wealthy elite scramble to shift their assets offshore and out of reach of the Chinese authorities. In the past many entrepreneurs believed that as long as they had extensive assets abroad, they had political insurance.
“This is Richter scale 9 for the private sector in China,” said Rupert Hoogewerf, who compiles the annual Hurun China rich list. “Guo Guangchang is one of China’s most respected entrepreneurs and the most active Chinese entrepreneur on the international circuit.”
Mr Guo, 48, has spent billions buying high-profile global brands ranging from French tourism group Club Med and Canada’s Cirque du Soleil, to insurers and property.
He co-founded Fosun with three university friends in 1992 and likes to model himself after the legendary investor, Warren Buffett. This year’s Hurun Rich list ranked him the 17th richest person in China with wealth of Rmb50bn ($7.7bn).
Fosun’s statement said he “may continue to take part in decision-making on major company matters via appropriate means”. It added that the investigation did not pose a “material adverse impact on the financial operation of the group”. “The operations of the company remain normal,” it said.
Fosun’s strategy is to invest in companies that primarily serve China’s growing middle class, including the booming markets in domestic and outbound Chinese tourism.
The case comes days after the European Central Bank approved Fosun as a “fit and proper” owner of a eurozone bank. Central bank officials have been trying to verify reports about Mr Guo since making that decision.
A person close to the ECB said it was “bad timing”, but added that even if it were confirmed that Mr Guo had been arrested, it would not automatically reverse its authorisation.
The reports about Mr Guo were only the latest involving senior businesspeople going missing, apparently in connection with enquiries into corruption or market manipulation. Citic Securities, China’s largest investment bank, said on Sunday it was unable to contact two of its top executives and last month Guotai Junan, one of China’s leading brokerages, said it could not reach its chairman and chief executive.
Fosun was one of the bidders in the aborted auction for Portugal’s Novo Banco and is also bidding for German private bank Hauck & Aufhäuser and BHF Kleinwort Benson.
A European executive whose company works closely with the Chinese conglomerate said Fosun officials told them they were able to establish contact with Mr Guo but it was minimal, possibly suggesting he had been detained. A friend of the Guo family said family members had lost touch with him.
Trading in shares of seven of Fosun’s listed companies on the Chinese mainland, including Shanghai Fosun Pharmaceutical, Nanjing Iron and Steel and Hainan Mining were also suspended.
Mr Guo is one of China’s more respected business leaders as well as an advocate of free market reform.
In March 2012, he met Mr Xi as he was poised to take over as the country’s top leader, and urged him to enact a series of economic reforms, including greater court protection for insurance companies, increased lending by non-bank financial institutions and greater scope for private equity businesses to operate, according to a presentation posted on the company website at that time.
Thomas Cook, which is in a joint venture with Fosun, saw its shares fall as much as 5.3 per cent to 110p on Friday morning, before closing down 2.33 per cent. “Fosun is a supportive shareholder in Thomas Cook and we are monitoring the situation closely,” the travel group said.
Rumours of Mr Guo’s disappearance began to circulate in China on Thursday when influential financial publication Caixin cited unconfirmed reports that police had detained him when he arrived in Shanghai on a flight from Hong Kong. Later, calls to the mobile phones of Fosun executives went unanswered.
Fosun: rise of an empire
1992 Guo Guangchang founds Guangxin Technology Development Company, a market research group, with classmates from Fudan University, using Rmb38,000. Guangxin later takes founding stake in Fosun Group
1994 Expands investments to property and pharmaceuticals
2004 Fosun International founded in Hong Kong; lists on main board of HK exchange in 2007
2010 Buys 7.1 per cent of Club Med, the first time a quoted Chinese group has taken a direct stake in a listed French company
2012 Sets up joint venture Pramerica Fosun Life Insurance with Prudential Financial. Also invests in Minsheng Bank, China’s largest private lender
October 2013 Pays $725m for New York building One Chase Manhattan Plaza
Sept 2014 Buys Portuguese insurer Caixa Seguros with bid of €1bn
February 2015 Wins takeover battle for Club Med, the French holiday group
April 2015 Fosun and TPG Capital pay $1.5bn to buy Canada’s Cirque du Soleil
May 2015 Pays $1.8bn for Bermuda-based insurer Ironshore
June 2015 Announces joint venture with UK travel company Thomas Cook
July 2015 Bids for Kleinwort Benson, one of London’s oldest banking names
July 2015 Announces €210m offer for German private bank Hauck & Aufhäuser
July 2015 Completes $433m acquisition of US insurer Meadowbrook
Sept 2015 Bid for Portugal’s Novo Banco is rejected and auction is cancelled
Sept 2015 Announces $1.5bn Hong Kong rights issue after raising $1.2bn in May through share placement
With additional reporting by Jackie Cai, Gabriel Wildau and Tom Mitchell in Shanghai and James Kynge in London
China’s Warren Buffett Guo Guangchang Is MIA
By Clayton Browne on December 10, 2015 4:20 pm in Business
First they came for China’s Carl Icahn, but I did not say anything because I was not China’s Carl Icahn…. Yet another wealthy tycoon has disappeared in China this week. This time the missing party is Guo Guangchang, often referred to as China’s Warren Buffett in the financial media because of his $7 billion insurance empire.
According to a report from Chinese Caixin website. Guo, the founder and chairman of the Shanghai-based Fosun International, has not been heard from since Thursday afternoon in China.
Caixin and other Chinese media outlets are claiming Guo was seen in the custody of Chinese authorities at the Shanghai airport after returning from a trip to Hing Kong.
There has been no official word on Guo’s detention, but the speculation is that Guo has been detained for a corruption investigation, and political analysts note the pattern has been public disappearance occurring before an official announcement. Caixin reports Fosun execs thought that Guo was still in Shanghai as of noon, but his phone has not been answered for several hours.
More on the disappearance of China’s Warren Buffett
Analysts point out that Guo would be most well-known business executive to be taken in for questioning in the corruption crackdown in the Middle Kingdom. The 48 year-old billionaire is the 11th richest man in China, and Forbes estimates he is worth around $6.9 billion. Fosun has aggressively expanded its portfolio in recent years, snapping up French resort company Club Mediterranee and paying top prices for prime real estate assets such as Chase Manhattan Plaza in New York City.
A number of high-level politicians and businessmen have been arrested relating to corruption charges in China over the last few months. Rumors have swirled around Guo since late 2013. The case began to seem more substantial after Wang Zongnan, a retired Communist Party official and ex-chairman of retail chain Shanghai Friendship Group, was sentenced to 18 years in prison for corruption late this summer. The decision rendered in that case claimed that Guo Guangchang and Fosun sold villas at discounted prices to Wang’s parents in return for favors from Wang. However, at the time, Fosun released a statement denying receiving any illegal benefits from the partnership with Wang.
Resisting Oil-Output Curbs at OPEC Meeting
December 3, 2015 — 11:26 AM EET Updated on December 4, 2015 — 1:46 PM EET
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Saudi Arabia says Iranian return will do `nothing' to market
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Venezuela minister warns of catastrophe for oil prices
Iran joined Saudi Arabia in saying it would keep on pumping despite oil prices hovering near a six-year low, giving the strongest signal yet that OPEC wouldn’t act at the group’s meeting in Vienna to curb the global supply glut.
As ministers from the Organization of Petroleum Exporting Countries gathered in Vienna, Iran said it would boost shipments after the lifting of international sanctions next year and wouldn’t accept any curbs until it had restored about 1 million barrels a day of output. Saudi Arabia said it didn’t feel obliged to make cuts to production, which is running close to a record.
“We don’t expect OPEC to do anything,” Iran’s Oil Minister Bijan Namdar Zanganeh said on Friday as the group’s ministers sat down to discuss policy, including how to fit new member Indonesia into its output ceiling. "It seems that the global market will grow demand” amid oversupply of 1.5 million to 2 million barrels a day, he said.
With oil prices hovering near a six-year low, cash-strapped countries including Venezuela, Ecuador and Algeria are pressuring Saudi Arabia to cut production. A year ago, Riyadh spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices. The move helped to send Brent crude, the global benchmark, down to $42 a barrel from near $100.
Saudi View
The Saudis, the world’s largest oil exporters, have stuck to their one-year-old view that any output cuts won’t work unless big producers outside OPEC, including Russia and Mexico, participate. If prices recover sharply, it could revive some U.S. shale production, displacing OPEC crude.
Saudi Arabia is willing to cooperate with anyone to re-balance the market, Oil Minister Ali al-Naimi told reporters on Friday after OPEC ministers arrived to discuss policy. The pressure isn’t solely on Saudi for output cuts, he said, adding that Iran’s return will do “nothing” to the market as demand for oil will strengthen next year.
OPEC May Surprise by Cutting Crude Production: Lennox
“Demand is going to increase anyway,” according to al-Naimi, who said Saudi Arabia hasn’t cut investment. “Nothing has been curtailed. We have a responsibility to maintain our 12.5 million-barrels-a-day capacity.”
Russia, Mexico and other big producers outside OPEC have given no indication they would agree to any OPEC-led output cuts. Russian Energy Minister Alexander Novak said Thursday that the country doesn’t see a production cut as viable.
Informal Gathering
Venezuela is proposing taking 1.5 million barrels a day of production out of the market.
“All the countries, including the Saudis,” are very worried, Venezuela’s Energy Minister Eulogio Del Pino told reporters on Friday, citing a decline in oil prices after the past three OPEC meetings. “We estimate that in the second quarter of next year, inventories will reach 100 percent and we see a catastrophe in the prices"
Ecuador Oil Minister Carlos Pareja said an informal meeting of his OPEC counterparts on Thursday – unusual in recent years and held in a hotel rather than at the group’s headquarters – was "difficult.”
Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said Saudi Arabia didn’t propose a cut at the meeting on Thursday. A solution to the market slump requires a global effort as OPEC pumps less than half the world’s oil, Kachikwu said on Friday in a Bloomberg TV interview in Vienna. Despite differences of opinion among members, OPEC has “common purpose” to find a solution to the price rout.
Conciliatory Tone
The divisions are a sign of how a year of low prices – and the prospect of more months of cheap oil – are hurting OPEC nations. The group’s annual revenue may fall to $550 billion from an average of more than $1 trillion in the past five years, the International Energy Agency said Nov. 10.
Iran has repeatedly said OPEC should reduce production to make room for its return to the market. OPEC pumps four-in-10 barrels worldwide.
Faced with dismay among members unable to balance their books, Saudi Arabia has adopted a conciliatory tone, promising to listen to all before a policy decision is made. OPEC watchers said the divisions make it more likely the group will re-affirm its current production ceiling of 30 million barrels a day on Friday.
Staying Course
"OPEC is likely to stay on course on December 4," said Gary Ross, chairman of New York based consultancy Pira Energy. OPEC needs consensus among all its members before changing the group’s output target.
The official ceiling is, however, largely symbolic as countries produce above it. OPEC pumped 32.1 million barrels a day in November, exceeding its target for an 18th month, according to a Bloomberg survey of companies and analysts. The overproduction is likely to worsen next year as Iran plans to pump an additional 500,000 barrels a day within weeks of international sanctions being lifted.
"We expect OPEC will likely maintain its production ceiling at the current level or adjust it upward slightly to reflect Indonesia’s re-joining the group while maintaining the goal of retaining market share in general," said oil consultancy Wood Mackenzie Ltd.
Indonesia Return
Indonesia, which left OPEC in 2008, has returned to the group. The country pumps roughly 800,000 barrels a day, so including it would bring OPEC’s official ceiling nearer 31 million barrels a day.
Brent crude closed on Wednesday at $42.49 a barrel, the lowest since 2009, when demand slumped during the global financial crisis. Brent futures climbed 1.7 percent at $44.58 as of 11:30 a.m. in London on Friday. International oil traders have said that unless OPEC reverses course, supplies will continue to overwhelm demand for months.
"The stock-build will continue to weigh on the market, with prices unlikely to move beyond the current range until well into 2017," Chris Bake, a senior executive at Vitol Group, the biggest independent oil trader, said Dec. 2.
OPEC Heads for Status Quo as Members Clash Over Crude Output Cut
December 3, 2015 — 8:32 PM EET
– Saudi Arabia opposes cuts without Russian participation
– Venezuela rallies cash-strapped members to support output cuts
OPEC looked on track to maintain the status quo after member states clashed over oil production policy at an unusual informal gathering before the group’s official meeting in Vienna on Friday.
Saudi Arabia held its line on Thursday, insisting other big producers outside the group such as Russia would have to join any output cuts by the Organization of Petroleum Exporting Countries, according to a person with knowledge of the discussions in a Viennese hotel.
With oil prices hovering near a six-year low, cash-strapped countries including Venezuela, Ecuador and Algeria are pressuring Saudi Arabia to cut production. A year ago, Riyadh spearheaded a decision to maintain output and fight for market share rather than cut production to sustain high oil prices. The move helped to send Brent crude, the global benchmark, down to $42 a barrel from near $100.
The Saudis, the world’s largest oil exporters, have stuck to their one-year-old view that any output cuts won’t work unless big producers outside OPEC, including Russia and Mexico, join. If prices recover sharply, it could revive some U.S. shale production, displacing OPEC crude.
Difficult Meeting
Russia, Mexico and other big producers outside OPEC have given no indication they would agree to any OPEC-led output cuts. Russian Energy Minister Alexander Novak said Thursday that the country doesn’t see a production cut as viable.
Ecuador Oil Minister Carlos Pareja said the pre-meeting – unusual in recent years and held in a hotel rather than at OPEC’s headquarters – was "difficult.” “We didn’t manage to reach an agreement yet,” he said.
At the informal gathering in a Viennese hotel, Venezuela tabled a proposal to reduce current production by about 5 percent, the person said, asking not to be identified because the meeting was private. Several other countries backed the proposal, the person said. Nigerian Minister of State for Petroleum Resources Emmanuel Ibe Kachikwu said Saudi Arabia didn’t propose a cut.
Losing Money
The divisions are a sign of how a year of low prices – and the prospect of more months of cheap oil – are hurting OPEC nations. The 12-member group’s annual revenue may fall to $550 billion from an average of more than $1 trillion in the past five years, the International Energy Agency said Nov. 10.
“The OPEC member countries have lost so much money,” Iranian Oil Minister Bijan Namdar Zanganeh said after arriving in Vienna. “It doesn’t seem that we can change the situation in the short term, it needs a long-term strategy."
Iran has repeatedly said OPEC should reduce production to make room for its return to the market. Yet, Zanganeh said Tehran would only consider a cap on its own production once it has reached pre-sanctions’ levels. OPEC pumps four-in-10 barrels worldwide.
Faced with dismay among members unable to balance their books, Saudi Arabia has adopted a conciliatory tone, promising to listen to all before a policy decision is made. OPEC watchers said the divisions make it more likely the group will re-affirm its current production ceiling of 30 million barrels a day on Friday.
Staying Course
"OPEC is likely to stay on course on December 4," said Gary Ross, chairman of New York based consultancy Pira Energy. OPED needs consensus among all its members before changing the group’s output target.
The official ceiling is, however, largely symbolic as countries produce above it. OPEC pumped 32.1 million barrels a day in November, exceeding its target for an 18th month, according to a Bloomberg survey of companies and analysts. The overproduction is likely to worsen next year as Iran plans to pump an additional 500,000 barrels a day once international sanctions over its nuclear program are lifted.
"We expect OPEC will likely maintain its production ceiling at the current level or adjust it upward slightly to reflect Indonesia’s re-joining the group while maintaining the goal of retaining market share in general," said oil consultancy Wood Mackenzie Ltd.
Indonesia, which left OPEC in 2008, has returned to the group. The country pumps roughly 800,000 barrels a day, so including it would bring OPEC’s official ceiling nearer 31 million barrels a day.
Brent crude closed on Wednesday at $42.49 a barrel, the lowest since 2009, when demand slumped during the global financial crisis. Brent futures traded at $43.87 as of 5:10 p.m. in London on Thursday. International oil traders have said that unless OPEC reverses course, supplies will continue to overwhelm demand for months.
"The stock-build will continue to weigh on the market, with prices unlikely to move beyond the current range until well into 2017," Chris Bake, a senior executive at Vitol Group, the biggest independent oil trader, said Dec. 2.
