Alibaba Founder-Led Group to Acquire MassMutual Asia for $1.7 Billion

A group of investors led by a company backed by Alibaba’s founder Jack Ma agreed to acquire the Hong Kong and Macau operations of Massachusetts Mutual Life Insurance Co. (MassMutual) for $1.7 billion.

Yunfeng Financial Group Ltd., co-founded by Ma and Target Media’s founder Yu Feng, said in a statement released on Thursday that it will acquire a 60% stake in MassMutual Asia in a cash and new-share placement deal. The remaining 40% will be acquired by seven other Asian investors including Ant Financial, SINA Corp. and the Singapore government-backed City-Scape Pte. Ltd., the statement said.

The deal will help Yunfeng expand into insurance and annuity products, and gain immediate access to MassMutual’s much-bigger customer network in Asia, which could facilitate more cross-selling of Yunfeng’s other financial services, such as securities brokering.

The news sent Yunfeng’s Hong Kong-listed shares up by more than 30% during Friday trading. They ended at HK$6.62, up 5.4% from the previous session.

“This transaction is a milestone step of Yunfeng Financial Group becoming a financial conglomerate, integrating its existing fintech focused financial services with traditional insurance business,” said co-founder Yu, who is also the chairman.

Yunfeng said it will pay MassMutual HK$2.66 billion in cash and notes, and issue HK$5.2 billion worth of new shares — equivalent to a 25% stake in the company — to MassMutual. The deal will make MassMutual the second largest shareholder of Yunfeng, after a company indirectly owned by the co-founders.

MassMutual Asia is among the top 10 life insurers in Hong Kong by premium income. In 2016, MassMutual’s income from insurance premiums reached nearly HK$6.9 billion, with assets totaling HK$44.5 billion.

With a net profit of HK$1.12 billion in 2016, MassMutual Asia’s price-to-earnings ratio is approximately 11.7, making the company slightly cheaper than most other listed insurers in Hong Kong.

MassMutual Asia’s strong distribution capacity and existing customer base will be an asset to Yunfeng’s businesses, Yu said.

The acquisition may also be a boost to China’s largest internet financial-services provider Ant Financial, which will acquire another 5% stake in MassMutual Asia under the deal. Ant Financial, which is preparing for a public listing, has been forging global partnership in a bid to connect its payment service, Alipay, with more customers.

Eddie Ahmed, chairman, president and CEO of MassMutual International, said: “As part of this transaction, MassMutual, Yunfeng Financial Group and Ant Financial Services Group have agreed to enter into a strategic cooperation agreement to jointly explore future business opportunities.”

Contact reporter Liu Xiao (liuxiao@caixin.com)