SHANGHAI — Fosun International, the owner of Lanvin Group and French resort group Club Med, said media claims that Chinese regulators are asking local banks to examine their financial exposure to the conglomerate are “completely false.”
News started circulating as early as Monday that Fosun, one of the largest private conglomerates in mainland China, is under scrutiny by regulators, including China Banking and Insurance Regulatory Commission and Shanghai Banking and Insurance Regulatory Commission. The reports claimed the regulators are asking commercial banks to review and determine what risks they face relating to Fosun.
Fosun said the notice issued by regulators is a part of a “routine information gathering” protocol on “influential companies” and that the company has “demonstrated resilience despite the complex macroeconomic situation,” according to local media reports.
Shares in Fosun International Limited, the conglomerate’s most important company, dropped as much as 9.6 percent in Hong Kong to 4.41 Hong Kong dollars on Wednesday, the lowest since November 2012.
In the face of a property market downturn and a slowing economy, a Fosun bond rout triggered a slump for Fosun’s Hong Kong-traded dollar bonds this June.
This August, rating agency Moody’s downgraded the company with a “negative outlook.” Moody’s noted Fosun’s weak liquidity profile and expects “contagion risk” from Fosun’s property investments, including popular commercial real estate projects Shanghai Forte Land and Shanghai Yuyuan Tourist Mart.
According to the company’s latest 2022 interim report, Fosun has 261.1 billion renminbi, or $37.5 billion, in debt, up from 237.1 billion renminbi, or $34 billion, at the end of 2021. Fosun’s debt-to-asset ratio reached 56.8 percent, an increase of 3 percent compared to the end of last year.
Earlier this month, Fosun announced plans to reorganize its business portfolio to shrink its debt, including selling off shares in Fosun Pharmaceutical and Jinhui Liquor.
Started by “Chinese Warren Buffett” Guangchang Guo 30 years ago, Fosun built a business empire that includes real estate, pharmaceuticals, tourism and finance through overseas acquisitions and investments. Its portfolio includes Lanvin Group, Club Med resorts, the English football club Wolverhampton and BioNTech, the German coronavirus vaccine producer.