HSBC, which announced the transaction on Wednesday under its recovery plan to sell non-core assets, said CP Group's purchase was being partly financed by state-run China Development Bank. Dhanin - worth $9 billion according to Forbes magazine - already has major business interests in China ranging from agriculture to retail to auto manufacturing.
"This is phenomenal for HSBC shareholders because the bank is now sitting on at least $8 billion in profit," said Jim Antos, an analyst at Mizuho Securities in Hong Kong. "I'm not sure what CP Group would do with the stake though. I was joking earlier that every Ping An shareholder will now get a bucket of fried chicken for their insurance policy."
HSBC said it will make a post-tax gain of $2.6 billion on the deal. CP Group has a long history in China: it was the first multinational to invest in China's agri-business in 1979 and, under Beijing's latest five-year plan, it was tasked with helping to modernise China's farm sector. It also operates Lotus supermarkets in Shanghai, according to the company's website.
Also on Wednesday, China's biggest carmaker, SAIC Motor Corp, said it would start making cars in Thailand with CP Group. CP Group has only limited experience in insurance, though. In May this year, it sold out of a Thai joint venture with German insurer Allianz for about $9.8 million. CP Group could not be reached for comment on Wednesday, a public holiday in Thailand to mark the Thai king's birthday.