Prudential Financial Taps China Investments Through Fosun Private Equity Partnership

U.S.-based Prudential Financial Inc. is taking a big step into China investments through a private equity fund partnership with Shanghai-based holding company Fosun Group.

Through the partnership, Prudential will invest up to US$500 million in the fund, called the Pramerica-Fosun China Opportunity Fund LP. Fosun, which will manage the funds investments, will kick in another $100 million.

"Fosun has a very high degree of knowledge of the Chinese market," said Prudential Vice Chairman Mark B. Grier in an interview at the New York press conference announcing the deal.

Grier, who leads Prudential's global strategic initiatives, said Prudential had been cautious about entering the China investment market, knowing it would need a knowledgeable partner to proceed. "Working with a China-based company is very important for us," he said. "This is a fast-growing market, but we need to be confident of our moves."

"China requires commitment and a long-term strategy," he added.

Guo Guangchang, Fosun Group's chairman and one of four founders of the group, said at the press conference that Fosun prides itself on caution in its investment decisions.

Addressing his own reputation as "the Warren Buffet of China," he held out the Berkshire Hathaway chairman as having the kind of investment approach Fosun practices -- caution and value investing for the long term.

"Buffet is a role model we can learn from," said Guo. "He utilized funds from insurers and those funds tend to be cheap. Insurance is one of those businesses we consider profitable."

Liang Xinjun, Fosun's vice chairman and chief executive, said the group does not yet have a big presence in China's insurance industry. That may come, but for now he said Fosun is looking at manufacturing, energy and high-end consumer goods as its choice investment areas. "China is still growing rapidly, and these are the areas we intend to target -- areas that bring high value and good growth."

Prudential has a presence in China through a Beijing representative office; Everbright Pramerica Fund Management Co. in Shanghai; Pricoa Consulting (Shanghai) Co.; and Pricoa Relocation Hong Kong Ltd. Pramerica and Pricoa are trade names used by Prudential Financial and its affiliates in certain countries outside the United States.

Shares of Prudential (NYSE: PRU) were trading the afternoon of April 11 at $62.74, up 0.74% from the previous close.

Prudential Insurance Co. of America currently has a Best's Financial Strength Rating of A+ (Superior).

(By David Pilla, international editor, BestWeek: [email protected])