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SHANGHAI—Businesses controlled by Chinese billionaire Guo Guangchang said Friday he is assisting judicial
authorities in an investigation, statements that indicate his movements are restricted by authorities in China but do
little to clear up what is happening with one of the country’s most prominent entrepreneurs.
“The Company understands that Mr. Guo is currently assisting in certain investigations carried out by Mainland
judiciary authorities,” said a statement late Friday from his primary business group Fosun International Ltd. Other
group companies made similar statements.
Fosun International added, “Mr. Guo may continue to take part in decision makings of the Company’s major matters via
appropriate means. The directors of the Company are of the view that this investigation has not posed any material
adverse impact on the financial or operation of the Group. The operations of the Company remain normal.”
Mr. Guo’s whereabouts were the subject of intense speculation Friday as the tycoon’s primary businesses halted trading
and investors sold investments in companies associated with him.
The statements said shares will resume trading Monday.
Fosun is one of China’s best-known private companies. Its portfolio includes everything from French resort chain Club
Mé diterrané e SA and Greek jeweler Folli Follie to property in the U.S., including One Chase Manhattan Plaza
in New York.
As Fosun chairman, Mr. Guo normally signs even routine corporate announcements to the Hong Kong Stock Exchange but
Friday’s statement was issued by the company’s vice chairman, Liang Xinjun. Mr. Guo’s name appeared at the bottom of the
late evening statement that updated his status.
Fosun’s press officials declined to comment on Mr. Guo. A mobile phone with a number Mr. Guo has used was turned off
according to a message heard when the phone was dialed.
The billionaire’s absence comes as a number of Shanghai government officials and high-profile executives have come
under scrutiny both in Chinese corruption investigations and in probes that followed midyear turmoil in the country’s
stock market.
Chinese investigators have broad power to detain both suspects and potential witnesses who don’t face accusations of
wrongdoing.
There is no indication of what kind of investigation Mr. Guo assisting in or whether he could be implicated in
troubles being investigated.
Companies associated with Fosun but not subject to the trading halts plunged Friday.
At least 13 companies listed on China’s exchanges and invested in by Fosun fell in price, including Anhui Sunhere
Pharmaceutical Excipients Co., which fell 4.9%, and Zhengjiang Dian Diagnostics Co., which lost 3.8%. Unlisted Fosun
bonds also lost value, with a $400 million issue coming due in 2020 plunging to as far as 80.05 cents on the dollar,
before rebounding to 94.41 cents, according to data from Tradeweb. The issue fetched as much as 104.75 cents the
previous session.
“It’s a massive uncertainty to add to the equation at the moment,” said Gavin Parry, managing director of Hong Kong-
based brokerage Parry International Trading Ltd.
The 48-year-old Mr. Guo is among China’s wealthiest individuals, with a personal fortune estimated this year at $7.8
billion by Shanghai research firm Hurun Report, and one of its most internationally prominent businessmen. “This news is
akin to an earthquake of sorts to the business community,” Hurun founder Rupert Hoogewerf said in a video commentary he
distributed Friday, noting Mr. Guo has enormous respect among private businesspeople in China.
A number of private businessmen and executives at state-run companies have been detained in a three-year campaign by
Beijing to root out corruption. In recent months, authorities have also launched probes into finance-industry executives
following a government-led effort to rescue the country’s ailing stock markets. Just last month, Communist Party
antigraft inspectors chilled officialdom in Shanghai by announcing an investigation into a vice mayor.
The probes have cast a pall over business activity in Shanghai and made executives nervous about the ultimate aims and
scope of the efforts, several say.
President Xi Jinping has shaken China’s establishment since assuming power three years ago. Previous targets include
Zhou Yongkang, a former member of the Politburo Standing Committee, the Communist Party’s top body, as well as
provincial governors and generals in the People’s Liberation Army, plus party-appointed heads of giant oil, mining and
industrial business groups.
“The financial sector is the newest target of this strategy and is being pursued with great intensity,” researchers
from Eurasia Group said in a report published Thursday that calculates that Mr. Xi’s campaign is intensifying.
Operating from a riverfront tower in downtown Shanghai, Fosun is highly diversified in China with steel, property,
retail, financial services and travel, including one of Shanghai’s top tourist sites, Yu Gardens. In addition to its
extensive property holdings in China and abroad and its pharmaceutical business, it has partnered to make investments
with U.S. private-equity giant Carlyle Group and bought into brand names in Europe, like Club Med and a German bank.
More recently, Fosun has expanded into insurance and technology, plus looked at how to bring more entertainment to
China, including through its stake in Canadian performing group Cirque du Soleil.
Mr. Guo hasn’t evaded public scrutiny. In August, he was named during the sentencing on corruption charges of a
former senior Communist Party member in Shanghai who had run a government-owned dairy company. Mr. Guo had granted the
man favors for unspecified benefits, according to China’s official Xinhua News Agency, which said that Mr. Guo wasn’t
accused of wrongdoing. Fosun issued a statement saying Mr. Guo supported China’s anticorruption push.
Fosun reacted differently two years ago when rumors swirled on social media that Mr. Guo was in political hot water:
the company quickly arranged a conference call with investors and put him on the telephone to snuff out the market
chatter.
Over the past two decades, Mr. Guo has personified China’s fast rise and its embrace of entrepreneurialism. He started
life poor on a farm and earned a university education before becoming a global business success. Mr. Guo recently wrote
in an online commentary that his firm has assets under management topping $160 billion and holds as its goal to “become
a world-class business group.”
Mr. Guo attended Shanghai’s top university, Fudan, and in the early 1990s along with Mr. Liang and two other fellow
alumni founded a business that soon accumulated vast assets. Mr. Guo owned 58% of the group that picked up holdings in
steel mills, property development, pharmaceutical manufacturing, retail operations and financial services.
The business was listed as Fosun International on the Hong Kong Stock Exchange in 2007, and today is capitalized at
nearly $15 billion. According to mid-2015 filings, Mr. Guo effectively controls about 71% of the listed company.
Mr. Guo has repeatedly told interviewers he has modeled Fosun on principles espoused by U.S. investor Warren Buffett.
He said he seeks to mirror the famed U.S. investor’s focus on fundamental asset values, rather than market fluctuations.
“At most, we are Warren’s apprentice in China,” Mr. Guo told The Wall Street Journal for an article published earlier
this year.
Like many other entrepreneurs in China, Mr. Guo has also remained close to Chinese leaders, while some of Fosun’s
businesses have overlapped with government priorities. He has served as a deputy to China’s legislature, the National
People’s Congress, as well as represented Shanghai on a high-level central government advisory body called the Chinese
People’s Political Consultative Conference. Mr. Guo has often been asked to speak on behalf of the country’s private
business owners at government-sponsored events, such as an October visit to China by German Chancellor Angela Merkel.
Possible political problems have “always [been] our worry,” said one fund manager whose firm holds Fosun shares. The
investor described Mr. Guo as the ultimate “red capitalist,” equal parts private entrepreneur and government official.
It isn’t known how close Mr. Guo’s ties to the party are; he has said the party is represented within Fosun. In 2001,
he told a gathering of the party-affiliated Shanghai Federation of Trade Unions, according to the organization’s
website, “Although I’m not a party member, those around me are all party members.”
Esther Fung and Yifan Xie in Shanghai and Gregor Hunter in Hong Kong contributed to this article.
Write to James T. Areddy at james.areddy@wsj.com
(END) Dow Jones Newswires 12-10-152105ET Copyright (c) 2015 Dow Jones Company, Inc.