Corporate Finance

Legend Acquires Luxembourg’s BIL Bank for €1.5 Billion

China’s Legend Holdings has announced the acquisition of a 90% stake in Banque Internationale à Luxembourg (BIL) for €1.48 billion from Precision Capital, a Qatar investment fund that represents the royal family.

China’s Legend Holdings has announced the acquisition of a 90% stake in Banque Internationale à Luxembourg (BIL) for €1.48 billion from Precision Capital, a Qatar investment fund that represents the royal family.


A historical deal

The acquisition is the largest takeover of a European deposit-taking bank by a Chinese company in this history. BIL’s existing management team will remain intact while the Luxembourg government will keep the remaining 10% of the bank.

 

The deal value more than doubles the €730 million Precision paid in 2011 to Franco-Belgian financial group Dexia, BIL’s then parent company.

 

Founded in 1856 and the oldest private bank in Luxembourg, BIL numbers over 2,000 employees worldwide and had around €37.7 billion of assets under management at the end of 2016.

 

The BIL deal is subject to regulatory approval, including from the European Central Bank and Luxembourg regulator, and is expected to be completed in the first quarter of 2018. 

 

A strong buyer

Legend, best known as the owner of computer manufacturer Lenovo, first attracted the world’s attention in 2005 when it bought IBM’s PC unit for $1.75 billion, which made it the largest laptop maker in the world and transformed it overnight from a local to a global manufacturer.

 

In recent years, Legend has been diversifying into other industries from food and machinery to media, with its private equity firm Hony Capital and incubator Lenovo Capital. Its portfolio includes co-working space management company WeWork, concrete machinery manufacturer CIFA, London-based PizzaExpress, American media company STX Entertainment, as well as the world’s fourth largest coronary stent developer and manufacturer Biosensors International Group (BIG).

 

Increasing Interests

While China’s overall outbound investments have dropped off after the government tightened control over overseas deals this year, the finance sector is not on Beijing’s restricted list.

 

In May HNA became the largest direct shareholder in Deutsche Bank with nearly 10% stake, while Fosun holds a 24% stake in Portugal-based Millennium BCP. Anbang Insurance also controls both Fidea Assurances and Delta Lloyd Bank in Belgium.

 

With the takeover of BIL, Legend is looking to further expand its footprint in Europe’s financial sector and provide services to companies taking part in Beijing’s Belt and Road initiative.

 

Proposed by China in 2013, the Belt and Road project is aimed at building a modern-day “Silk Road,” focusing on connectivity and cooperation by land and sea, primarily between China and Southeast Asia, Pakistan and Central Asia, and beyond to the Middle East, Europe and Africa.

 

 

Jeanne Yizhen Yin

Read the full Special Report: Luxembourg: Small but Mighty

With a population of only half a million, Luxembourg is one of the world’s most developed economies and a key seat of the European Union. Thanks to its strategic location at the heart of Western Europe, social and political stability, innovative and international orientation, as well as modern legal and regulatory framework, the Grand Duchy is the Eurozone’s premier private banking center and the world’s second largest fund center, attracting banks, insurance companies, investment fund promoters and specialized service providers worldwide. Both international firms and local firms need to adapt themselves to the changing landscape of legal market.
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