From Investment to Win-Win: Fosun's Decade-Long Journey of Globalization in Portugal

Rhea-AI Summary

Fosun, China's largest private investor in Portugal, marks a decade of significant market presence since 2014. The company has built a robust ecosystem focused on insurance, banking, and healthcare through key investments: Fidelidade (Portugal's largest insurer), Luz Saúde (major healthcare group), and Millennium BCP (largest listed private bank). Fidelidade reported €2.808 billion in premiums (+5.9% YoY) and €104 million net income (+5.3% YoY) as of June 2024. The company has expanded to 13 countries, with international operations contributing over 30% of total premiums and 40% of profits. Digital transformation initiatives have shown success, with Fidelidade's app reaching 1.6 million users and BCP achieving €856 million in net profit in 2023.

Positive

• Fidelidade achieved €2.808B in premiums (+5.9% YoY) and €104M net income (+5.3% YoY)
• International operations contribute over 30% of total premiums and 40% of profits
• Millennium BCP recorded €856M net profit in 2023, a fourfold YoY increase
• Fitch upgraded Fidelidade's rating to A+ with stable outlook
• Strong digital transformation with 1.6M app users (15% of Portugal's population)

Negative

• None.

News Market Reaction – FOSUY

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+13.15% News Effect

On the day this news was published, FOSUY gained 13.15%, reflecting a significant positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

HONG KONG, Dec. 1, 2024 /PRNewswire/ -- This year marks the 45th anniversary of diplomatic relations between China and Portugal, as well as the tenth year of Fosun's deep engagement in the Portuguese market. As a global innovation-driven consumer group rooted in China, Fosun has grown into the largest Chinese private enterprise with the largest investment in Portugal since entering the market in 2014. Its local ecosystem is primarily focused on insurance, banking, and healthcare, including Fidelidade (Portugal's largest insurance company), Luz Saúde (one of the largest healthcare groups), and Millennium BCP (Portugal's largest listed privately-owned bank).

Fosun adheres to its strategy of being "rooted in China, globally operated." Over the past decade, it has continuously expanded its investment footprint in Portugal, deepened its industry operations, and actively fulfilled its long-term commitments to the country. Fosun has not only supported the local operations of its three Portuguese enterprises but also facilitated their rapid growth into international markets, particularly in Portuguese-and-Spanish-speaking countries, making it a model of Sino-Portuguese economic cooperation.

Investment Presence in Portugal

In 2013, impacted by the Eurozone financial crisis, Portugal faced severe financial shortages, with an unemployment rate reaching 17%. To reduce public debt, the Portuguese government implemented a series of privatization measures. Fosun, closely monitoring overseas investment opportunities, identified a suitable opportunity during this period.

In May 2014, Fosun acquired Portugal's leading insurance company, Fidelidade, for approximately €1 billion, marking the beginning of its investment in Portugal. Later in October, with Fosun's support, Fidelidade acquired a 96% stake in Espírito Santo Saúde's hospital operations for €460 million (later renamed Luz Saúde). 

After completing its investments in Portugal's insurance and healthcare sectors, Fosun gained market recognition for its efficient execution capabilities. Driven by a positive outlook on the Portuguese market and confidence in its global operational capabilities, Fosun acquired a 16.7% stake in Millennium BCP for €175 million in November 2016, later increasing its stake to approximately 20%, further consolidating its influence in Portugal.

Industry Operations + Ecosystem Synergy Driving Growth

Fosun holds an 85% stake in Fidelidade, the leading player in Portugal's insurance market, with a market share of approximately 30%. Years of industrial investment and operations have reinforced Fosun's strengths in "insurance + investment". Leveraging its resources, Fosun has helped Fidelidade diversify its asset allocation, broadening its scope across real estate, tourism, healthcare, and consumer sectors in Portugal and Europe. This collaboration has fostered mutual growth between Fidelidade and Fosun. As of June 30, 2024, Fidelidade's gross written premiums reached €2.808 billion, a year-on-year increase of 5.9%, with net income reaching €104 million, up 5.3% year-on-year.

Luz Saúde operates 29 medical facilities, covering 75% of Portugal's population, and is the only professional medical institution in Portugal to offer Chinese-language guidance services. Fosun has supported Luz Saúde in expanding its hospitals, creating nearly 1,000 jobs. Additionally, Fosun facilitated a partnership between UnionPay International and Millennium BCP, resulting in the successful issuance of Europe's first UnionPay card by a local financial institution, providing convenient services for international clients visiting Portugal.

With the support of Fosun, Fidelidade, Luz Saúde, and Millennium BCP have established a synergistic "insurance + healthcare + banking" ecosystem, creating significant cross-sector synergies. For instance, local families purchasing Fidelidade insurance can access premium medical services through Luz Saúde and financial products through Millennium BCP. This ecosystem strategy has enabled the three companies to empower each other, expanding profit margins.

Jorge M. Correia, Chairman of Fidelidade, said: "We have observed that successful companies of the future will have strong ecosystems. We have built a robust synergy between insurance, healthcare, and wealth management. This is a result of Fosun introducing its ecosystem approach, helping us access more resources and achieve growth."

Actively Expanding Overseas Markets from Portugal

Fidelidade's success in Portugal has demonstrated to Fosun the replicability and growth potential of its business model. Guo Guangchang, Chairman of Fosun International, stated: "Portugal boasts an open market, a favorable investment environment, and a steadily progressing government, making it one of the most important countries for Fosun's global development outside of China. There is also immense room for future growth. Fosun will further position Portugal as a critical gateway for investments in Portuguese- and Spanish-speaking countries, strengthening its connections with more global markets and regions."

In early 2019, Fidelidade acquired a 51% stake in La Positiva, a leading insurance company in Peru, expanding its operations to Peru, Bolivia, Paraguay, and Nicaragua. This significantly broadened its market presence in Latin America. Currently, Fidelidade ranks first in market share in Bolivia and third in Peru.

In Africa, Fidelidade has actively expanded into Portuguese-speaking markets, particularly in Mozambique and Angola. This international expansion strategy has created additional growth opportunities for Fidelidade while also validating Fosun's successful globalization strategy.

As of the first half of 2024, Fidelidade's operations span 13 countries across Europe, Africa, and Latin America, achieving growth in both domestic and international markets. The share of international business has continued to increase, with total gross written premiums from international markets reaching €885 million, accounting for over 30% of the total, a significant rise from 6% in 2017. International business also contributed approximately €51 million in net profits, representing over 40% of total profits.

In September 2024, Fitch Ratings upgraded Fidelidade's Insurer Financial Strength (IFS) rating from "A" to "A+" and its Long-Term Issuer Default Rating (IDR) from "A-" to "A", with a stable outlook. This represents the highest rating Fitch has assigned to a financial institution in Portugal.

Accelerate Digital Transformation

Moreover, Fosun has enhanced operational efficiency and competitiveness through digital transformation, accelerating the digital progress of its Portuguese businesses. For example, Fidelidade launched the MyFidelidade app, offering users convenient online insurance management services, including policy viewing, claims submission, information updates, and access to resources. As of June 30, 2024, the app had over 1.6 million registered users, accounting for more than 15% of Portugal's total population, with digital channel sales increasing by 16% year-on-year.

Luz Saúde provides the MyLuz digital platform for patients, enabling them to access medical records, billing, payments, and appointments for both in-person and virtual consultations. In 2023, nearly 2 million telemedicine consultations were conducted, with severe cases accounting for 41% of the total.

Millennium BCP offers robust online and mobile banking services, allowing customers to manage accounts, conduct transactions, and access financial products anytime. In 2023, BCP achieved a record consolidated net profit of €856 million, a more than fourfold year-on-year increase, underscoring the positive impact of digitalization on financial performance.

Innovation and Responsibility Go Hand in Hand

Fosun always adheres to the original aspiration of "Self-improvement, Teamwork, Performance and Contribution to Society", which aligns seamlessly with Fidelidade's focus on individual and family well-being and its commitment to "business for good".

In early 2016, under the principle of "Innovation and People-oriented Development", Fosun Foundation, in collaboration with Fidelidade and Luz Saúde, launched the sustainable innovation project "Protechting Global Youth Innovation and Entrepreneurship Competition". The name "Protechting" is derived from the words "Protection" and "Technology", aiming to support young people in the "Internet+" era in realizing their entrepreneurial dreams. The initiative encourages youth to deeply integrate the internet with health, medical care, insurance, and ESG fields, inspiring new ideas and leveraging innovation to enhance quality of life.

In 2017, the Protechting Global Youth Innovation and Entrepreneurship Hub was established in Macau, further promoting innovation and entrepreneurship among young people in Hong Kong and Macau. Since 2018, the Protechting competition has developed over 40 pilot projects and achieved 5 commercial collaborations. To date, the Protechting competition has been held seven times, consistently focusing on entrepreneurial-minded young innovators. It connects with outstanding companies between China and abroad, providing a platform for young entrepreneurs to learn and exchange ideas. Experts in management, marketing, investment, and technology are invited to offer professional guidance to participants.

In May this year, the top three teams from Protechting 6.0 were invited to China for visits, exchanges, and roadshows, showcasing the creativity and energy of Europe's young innovators while seeking more business collaboration opportunities in China. Protechting has had a significant impact on fostering innovation at Fosun, while also promoting cross-cultural exchange in various fields, particularly in innovation.

In addition, the annual Fidelidade Community Award allocates €750,000 each year to support the social inclusion of people with disabilities, promote healthy living, and care for the elderly. Its impact on the Portuguese community continues to grow.

Guo Guangchang, Chairman of Fosun International, said: "Fosun's vision of globalization is not limited to a 'two-way exchange' between the world and China. It also extends to the endogenous growth of ecosystem enterprises both at home and abroad, encouraging them to actively expand beyond their local markets within their respective fields."

"Fosun's 'global organization + local operations' model has evolved into a unique and valuable capability. Portugal serves as our gateway to investing in Europe and as a key entry point for other Portuguese- and Spanish-speaking countries. Fidelidade exemplifies the success of Fosun's globalization strategy."

Reflecting on a decade of investment in Portugal, Fosun has worked hand-in-hand with local companies, achieving sustained growth while creating long-term value for the local market. Looking ahead, Fosun aims to focus on developing enterprises where it has already established advantages, with innovation and globalization as core engines, to build sustainable, predictable, and steadily profitable enterprises.

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SOURCE Fosun

FAQ

What is Fosun's market share in Portugal's insurance sector through Fidelidade (FOSUY)?

Fosun holds an 85% stake in Fidelidade, which commands approximately 30% market share in Portugal's insurance market.

How much did Fosun (FOSUY) invest to acquire Fidelidade in 2014?

Fosun acquired Fidelidade for approximately €1 billion in May 2014.

What was Fidelidade's international premium revenue in H1 2024 (FOSUY)?

Fidelidade's gross written premiums from international markets reached €885 million, representing over 30% of total premiums.

How many countries does Fosun's Fidelidade (FOSUY) operate in as of 2024?

As of the first half of 2024, Fidelidade operates in 13 countries across Europe, Africa, and Latin America.