China's Legend Holdings Corp is in talks on a potential investment in Qatari-owned Banque International a Luxembourg (BIL), a person with knowledge of the matter told Reuters. Legend, owner of computer group Lenovo Group Ltd, has been in discussions to buy around 90 percent of the private bank from Precision Capital, an investment vehicle of Qatar royal family members including former Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani, the person said.
People familiar with the industry said they would expect BIL to fetch a price of 1-1.5 billion euros ($1.14 billion - $1.71 billion). Chinese companies have become increasingly interested in European banks, despite the sector's struggles with low profitability and increasing regulatory burden. In May, China's HNA became the largest direct shareholder in Deutsche Bank, while Fosun holds a 24 pct stake in Portugal's largest listed bank Millennium BCP.
The deal is likely to be finalised in the coming weeks and Legend is not looking to buy the remaining 10 percent of BIL which is owned by the Luxembourg government, the source said. Another source close to Sheikh Hamad said Precision was in advanced talks to sell its controlling stake to a potential buyer but a final agreement had not yet been reached. The source declined to comment on whether Precision was talking to Legend.
The sources could not be identified as the talks are not public. A spokeswoman at Legend and a spokesman for Sheikh Hamad's office in Doha declined to comment as did BIL. Precision and the Luxembourg government did not respond to Reuters' request for comment.
OVERSEAS AMBITIONS
Beijing-based Legend, also parent of private equity firm Hony Capital and venture capital firm Legend Capital, is looking to diversify beyond the sluggish PC business into overseas financial services. By teaming up with its part-owned investment firms, Legend has dipped its toe into a variety of industries from food production and car rental to dentistry and start-up incubation. If the BIL deal goes through, Legend would clinch its first major European transaction after securing a minority interest in Britain's Pension Insurance Corporation (PIC) last year.
Legend also made it to the final stages of the auction for Madrid-based mutual fund platform Allfunds but lost the bid to funds GIC and Hellman & Friedman in that deal earlier this year. Legend had also looked at an investment in Austrian bank Bawag, but was unable to negotiate a deal, people close to matter said have said in the past. Precision agreed to buy BIL in 2011 for 730 million euros when Franco-Belgian financial group Dexia, BIL's parent company, needed a state-led bail out by France, Belgium and Luxembourg and was required to sell off all of its active businesses.
Analysts said at the time that the price Precision paid was well below market value. BIL, founded in 1856 as the oldest private bank in Luxembourg, is supervised by the European Central Bank together with Luxembourg's Commission de Surveillance du Secteur Financier. It employs some 2,000 people worldwide and had some 37.7 billion euros of assets under management at the end of 2016. In 2016, BIL's net income fell to 110 million euros from 134 million in 2015, mainly due to writedowns and restructuring expenses, according to its annual report.