Chinese company to become majority shareholder in Australia’s largest mortgage insurer 

China Oceanwide is set to become the biggest shareholder in Australia’s largest mortgage insurer under a proposed takeover of its US parent.
A Chinese company founded by billionaire Lu Zhiqiang stands to become the majority shareholder in Australia’s largest mortgage insurer after making a $US2.7 billion ($3.6 billion) bid for its US parent.
China Oceanwide has agreed to buy all the shares in New York-listed Genworth Financial, which is the 52 per cent shareholder of Genworth Mortgage Insurance Australia (GMIA).
Mr Lu, the chairman and founder of China Oceanwide, is worth $US5.2 billion and is the 29th richest person in China, according to Forbes.
China Oceanwide would pick up the 52 per cent shareholding in the Australian business under the deal, which will require regulatory approvals.
The companies said China Oceanwide intended to keep Genworth’s portfolio of businesses, including the Australian mortgage insurance arm, which was floated on the ASX early last year.
Genworth Financial has had difficulties in its life insurance business, and the proposed takeover would help shore up the group by injecting $US1.1 billion of additional capital.
The takeover, a $US5.43-a-share all-cash offer, was structured to increase the likelihood of obtaining regulatory approvals, the companies said.
China Oceanwide is a privately held, family owned financial holding group, with interests in financial services, energy, culture, media and real estate.
Mr Lu said in a statement: “Genworth is an established leader in both mortgage insurance and long-term care insurance, which are markets that present significant long-term growth opportunities.”
“We are impressed by Genworth’s purpose and its focus on helping people manage the financial challenges of ageing as well as achieving the dream of home ownership.”
Genworth Financial’s board has backed the deal, which will also require approval from shareholders.
“The China Oceanwide transaction is the result of an active and extensive review process conducted over the past two years under the supervision of the board and with guidance from external financial and legal advisors,” Genworth’s chairman, James Riepe, said.
Genworth Financial said its day-to-day operations were not expected to change because of the deal.
Lenders’ mortgage insurance (LMI) protects banks against losses in a default, and is an important backstop in protecting the financial sector from risks in the property market. The product is often mandated by banks when a borrower has a deposit of less than 20 per cent.
The Australian Prudential Regulation Authority regulates this industry domestically, and it is understood it would need to approve a change of ownership in the largest shareholder in the biggest domestic provider of LMI.
GMIA shares were up 1.4 per cent to $2.97 in early trade on Monday.

One Comment Add yours

  1. Trevor says:

    Sick , all this should not be happening and all because Australian government wants to take the easy road and sell us out to pay for their high salarys , lurks and perks or political welfare . Get back to our buy Australia sell Australia from Australia and made in Australia owned by Australians constitutional run governments and keep it that way


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