Fosun Group, China’s biggest private conglomerate, made a firm offer to buy a 16.7% stake in Portugal’s largest listed bank, Millennium BCP, via a dedicated capital hike with a possible further increase of the stake to up to 30%.
Millennium BCP said in a statement issued late on Saturday the offer envisaged a subscription price in the capital increase not exceeding €0.02 a share.
With BCP’s current market capitalisation of €1.18bn ($1.32bn), the proposed initial deal would be worth around €200mn.
“Fosun is also considering increasing its stake through secondary market acquisitions or in the context of future capital increases of BCP, with an aim of potentially increasing Fosun’s shareholding to 20-30% of BCP,” the lender said.
BCP shares closed at €0.0202 on Friday, up nearly 7%.
The stock has shed over 60% of its value so far this year due, in a large part, to concerns about its capital needs, and the offer from the wealthy Chinese group could give it a welcome boost.
On Friday, BCP said it obtained “clearly positive” results in the latest stress test by the European Central Bank, significantly improving its solvency ratio from a previous test, even as it posted a first-half loss after impairments for bad loans to clean up its books.
BCP said it recognised the “the potential strategic interest of the proposal” by Fosun and the executive board will “swiftly proceed with a careful analysis of the proposal, considering the many positive aspects of the proposed operation, in order to make a decision on opening negotiations and presenting a recommendation to the Board of Directors, as soon as possible”.
It added, however, that there is no guarantee that the proposed deal will go ahead and no decision has been taken yet.
The proposal is subject to several conditions set by Fosun, including a clarification from authorities that it will not be called upon to contribute to the Portuguese bank resolution fund, as well as the implementation and price adjustment of the reverse stock split process approved by BCP shareholders in April.
Last year Fosun made a bid for Portugal’s Novo Banco, which emerged from the 2014 rescue of Banco Espirito Santo.
However, it subsequently pulled out because of the price and has stayed clear of a relaunched sale process this year.
If the state fails to sell the bank, the resolution fund, which is the common responsibility of all banks working in Portugal, may have to foot the bill worth €3.9bn.
Fosun, whose holdings range from medical companies to French travel group Club Med and entertainment group Cirque du Soleil, entered the Portuguese market with the 2014 purchase of the country’s leading insurer, Fidelidade, and the healthcare unit of the bankrupt Espirito Santo business empire.