The sprawling group is offloading many of its prize investments
Save time by listening to our audio articles as you multitaskMr Guo does not appear in imminent danger of sharing their fate. But his company is in trouble. On October 25th Moody’s, a ratings agency, downgraded Fosun’s debt deeper into junk territory. Chinese banks have been asking the firm to provide more collateral for loans. To meet its obligations Fosun has already divested $5bn-worth of assets this year, according to data from Refinitiv, a research firm. By 2023 it could shed $11bn-worth.
Fosun has sought to offer Chinese people a three-pronged lifestyle experience that targeted their “happiness, wealth and health”. Customers could look to it to manage their money, plan their holidays and sell them medicines.
The reality of this success is debatable. In 2015 Mr Guo vanished for a few weeks amid a police probe, only to emerge pledging to buy fewer assets and focus on managing the ones he already has. Over the next two years Fosun divested assets worth around $9bn. The discipline did not last; in 2017 it splurged nearly $7bn on new investments. Soon afterwards some of its bets began to sour. In 2019 Thomas Cook, a British travel company part-owned by Fosun, filed for bankruptcy.
Throughout, debt has loomed large. In annual investor meetings Fosun executives have routinely pledged to bring leverage down. To little effect, it seems. And things may have got dicier of late, as the company has tapped more short-term debt, which now makes up 53% of its total borrowings of $16bn, up from 46% in 2021.
An even bigger problem than its debt may be Fosun’s business model. It was based on a vision of the future where both China’s businesses and its people travelled and spent freely around the globe. But China’s zero-covid policy has trapped most Chinese at home for nearly three years and dented consumer confidence. And under the increasingly authoritarian Mr Xi, Chinese companies are viewed with growing caginess in the West. In this new world, Fosun looks like a relic of a happier time.
United Kingdom Latest News, United Kingdom Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
This family-run Chinese restaurant served up award-winning food with a smileReporter, Lucinda, visited this popular Chinese restaurant on Clifton Street with partner, Brian, and enjoyed a delicious meal in elegant surroundings – with a birthday surprise from staff.
Read more »
I spent 10 days in a secret Chinese Covid detention centre\n\t\t\tInsightful reads\n\t\t\tInterviews & reviews\n\t\t\tThe FT Crossword\n\t\t\tTravel, houses, entertainment & style\n\t\t
Read more »
Some US techies can still work for Chinese chipmakersBut if you authorize or handle delivery of factory kit – or service it – you're out
Read more »
Canada orders Chinese companies to divest stake in lithium mines\n\t\t\tJournalists in 50+ countries follow the constant flow of money made and lost in oil & gas while\n\t\t\ttracking emerging trends and opportunities in the future of energy. Don’t miss our exclusive\n\t\t\tnewsletter, Energy Source.\n\t\t
Read more »
Spain briefly closes airspace over risks from Chinese rocket debrisDebris from the Chinese rocket is expected to pass over Catalonia and land in the Atlantic.
Read more »