Ping An seeks foreign partners for sustainable plays in China
Ping An Group is looking for potential partners to invest in China’s energy transition and sustainability efforts, where the insurer sees growth trends that hold long-term potential.
“We welcome foreign investors who are willing to allocate their money to China's market, and we're willing to work with them,” Benjamin Deng, Chief Investment Officer at Ping An Group, told the audience during AsianInvestor’s 19th Asian Investment Summit in Hong Kong on May 23.
Deng named the ongoing rise of electric vehicles, robotic automation, and renewable energy as trends that foreign investors could explore together with Ping An.
The insurance group has developed internal structures for investing in the Chinese market, including its own asset management company as well as platforms for private equity and private debt.
“By regulation, an insurance asset management product must have multiple investors; we cannot take the take 100% of the share. So, we need more investors to participate in those products,” Deng explained.
As of the end of March, Ping An’s insurance funds investment portfolio held Rmb4.93 trillion ($693 billion) in assets.
EV OPPORTUNITIES
Deng shared some of his observations on China’s development, particularly in relation to the country’s environmental policies.
He shared statistics on the surging sales of electric vehicles (EVs), a trend that is expected to continue.
“This year is like crazy selling. During the Chinese New Year, I was traveling to a fourth-tier city in Guangdong province, and the EVs are all over the place,” Deng said.
The rollout of charging stations for EV is also continuing, making it attractive to invest in EV-related infrastructure, he added.
“People can charge their EVs at any gas station without queuing. The electrical charge stations are [emerging] everywhere in China, and I think that's going to be a phenomenon for years,” Deng said.
SHEEP, SOLAR AND ROBOTS
On another recent trip, Deng visited a factory owned by Chinese appliance manufacturer Midea Group.
In 2016, Midea bought Kuka, a German manufacturer of industrial robots and factory automation systems. The company’s factories are now showcasing the potential of robot automation in industrial production.
“You go into this huge factory, and there's just a few people and amazing automation,” Deng said.
Deng also discussed a renewables project generating unexpected opportunities. A solar farm built in a desert in Xinjiang province became the setting for a surprise grassland emerging under the solar panels. It was then used as grazing for sheep.
“They turned that desert into a sheep farm. It was amazing. So that was very much an unintended consequence of the trend of power energy transformation. So I could see huge transformations happening inside China on these energy and environmental protection trends,” Deng said.
ESG PUSH
Ping An is also actively contributing to the development of China’s sustainability framework and environmental, social, and governance (ESG) standards in China.
In December 2023, for example, the Insurance Association of China issued new guidelines on ESG disclosure for insurance institutions. The practices represent China’s first insurance-specific standards for disclosure.
As one of the largest asset owners in China, Ping An was a major contributor to the new guidelines. The firm runs its own ESG data system that carries out rating, scoring, and analytical functions.
The guidelines reference the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Hong Kong stock exchange, while also considering the unique characteristics of China and its insurance industry.
For example, it includes disclosure on rural revitalisation and how the company supports the real economy. Both are stated priorities that Chinese authorities have put forward for the financial industry.
Considering the industry’s capabilities for ESG disclosure are still fairly nascent, compliance with the new guidance is voluntary, Ping An group board secretary Richard Sheng, noted in January.
“Under the effective leadership and promotion of the Insurance Association of China, I believe there will be a better disclosure rate in the industry, and the quality of disclosure can be effectively improved,” Sheng told AsianInvestor at the time.
Also read: Ping An sees China's new ESG norms boosting transparency
Meanwhile, “the new rule could guide small and medium-sized insurance companies to standardise disclosure, which will facilitate the high-quality development of the financial industry,” Sheng added.
Existing ESG disclosure standards in China are mainly for listed companies, and compliance is also mostly voluntary.