Value Partners slumps on stake sale talks

Value Partners Group, one of Asia's largest asset managers by market capitalization, plunged 4.3 percent on Tuesday after it confirmed talks over a potential stake sale on Monday evening.

As the first asset management firm listed in Hong Kong, Value Partners saw its shares surge as much as 8.6 percent on Monday after media reports said HNA Group is in talks it purchase some shares held by its Chairman Cheah Cheng-hye. The stock headed for its biggest gain in more than a year, until trading was suddenly halted.

Value Partners said in a Hong Kong exchange filing on Monday evening that its shareholders Cheah and Yeh V-nee are in discussions with a potential buyer of their shares. The two shareholders and the potential purchaser signed a non-binding memo of understanding on January 24.

"Up to this moment, discussions are still ongoing and the related shareholders have not entered into any definitive agreement with the potential purchaser in relation to the possible transaction," the filing said.

Bloomberg reported that HNA is in talks with Value Partners to purchase some shares held by Cheah, with the possibility to further increase its stake, citing the sources.

The report cited another source as saying the transaction could value Value Partners at more than $2 billion.

"Value Partners has a strong presence in Asia. The potential investment would generate good returns for HNA," said Kenny Wen Kit, a Hong Kong-based wealth management strategist at Sun Hung Kai Financial.

He said if the two parties reach a deal, it would bring multiple benefits for HNA. First, HNA could make use of its ample surplus funds. Second, Value Partners could help HNA to enhance its presence in Asia, and help boost the group's asset management business.

HNA has been on a spending spree in recent months, as it looks to diversify from its traditional logistics core business. The potential acquisition of Value Partners would be HNA's fourth investment in an asset manager in half a year.

HNA gained control of Austrian asset manager C-Quadrat Investment AG this month, after agreeing to acquire 25 percent of Old Mutual Plc's US asset management arm in March. It reached a deal in January for a $200 million stake in Skybridge Capital, the US fund-of-hedge funds firm founded by Anthony Scaramucci.