CNinsure to obtain a 20.58% equity interest in CFSG by subscribing to CFSG's newly-issued shares
CNinsure, a China-based independent insurance intermediary company, has entered into agreement to acquire 20.58% equity interest in China Financial Services Group (CFSG), a consumer credit brokerage company based in Guangzhou, China, for a cash consideration of RMB85.5 million.
Reportedly, pursuant to the agreement, CNinsure will obtain a 20.58% equity interest in CFSG by subscribing to CFSG’s newly-issued shares. The pre-money valuation is based on a multiple of 3.5 times CFSG’s estimated net income in 2010.
Yinan Hu chairman and CEO of CNinsure, said: “It marks a starting point of our expansion into the consumer financial services sector beyond merely distributing insurance products. It is also the milestone step towards our aim of building a platform to offer one-stop services of multiple financial products and turning the company into a world-class diversified financial services group.”
“We believe the acquisition will generate compelling synergies for both parties. Firstly, it will enable both companies to further increase their revenues by leveraging each other’s customer database and creating cross-selling opportunities. Secondly, it will help significantly reduce operating costs and enhance operating efficiencies through the provision of an integrated and shared operating and IT infrastructure and back office support,” he added.
Upon the completion of this acquisition, Mr. Hu and Qiuping Lai, president of Cninsure, will continue to be members of the new board of CFSG as designated by CNinsure and Mr. Hu will serve as the board chairman.