November 7, 2017 / 10:23 AM / 5 months ago

ACR calls off sale to Shenzhen govt-consortium after buyers flag delays

HONG KONG, Nov 7 (Reuters) - A planned sale of ACR Capital, the holding firm for a Singapore-based reinsurer, to a Shenzhen government-owned consortium has been called off after the consortium flagged it would not be able to close the deal this year, ACR’s chief executive said.

ACR, the holding firm for Asia Capital Reinsurance Group, agreed last October to sell itself to Shenzhen Qianhai Financial Holdings and Shenzhen Investment Holdings Corp, and had hoped the deal would be completed by November.

But ACR decided to walk away from the deal, which sources have said was worth about $1 billion, after it was told by the consortium that the “internal approval process” was taking longer than expected.

That meant that ACR would not have been able to provide any certainty of a deal to its shareholders and clients on Jan. 1, when it conducts its annual renewal of reinsurance contracts.

“The timeline wasn’t compatible,” said Bobby Heerasing, ACR’s group chief executive, adding that the decision to call off the deal was mutual and that ACR had no imminent plans to re-open the sale process.

It was not immediately clear if the internal approval issues were at one or both of the Shenzhen companies. Qianhai Financial Holdings declined to comment. Shenzhen Investment Holdings did not immediately respond to a request for comment.

The announcement of a deal last year came ahead of China’s moves to tighten its control of capital outflows and curb outbound investment as part of its efforts to maintain a stable yuan.

But the deal obtained approval from China’s National Development and Reform Commission and the State Administration of Foreign Exchange, as well as from the Monetary Authority of Singapore and Bank Negara Malaysia, according to Heerasing.

“Financing wasn’t an issue,” he said.

Morgan Stanley advised ACR on the sale while the Shenzhen consortium was advised by AON Securities.

There was no breakup fee in the transaction, Heerasing said.

Reporting by Kane Wu; Additional reporting by Julie Zhu; Editing by Edwina Gibbs

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