Principal® announces pension joint venture in China

Rhea-AI Summary

Principal Financial Group has announced a strategic acquisition of a 17.647% stake in China Construction Bank Pension Management Co., Ltd. (CCBP), enhancing its global pension services. CCB retains a 70% majority stake, with the Social Security Fund of China holding 12.353%. This move marks Principal as the first international investor in a Chinese bank-sponsored pension firm, aiming to address the growing retirement needs of China's aging population. The partnership will leverage Principal's expertise and CCB's distribution network, contributing significantly to China's multi-pillar pension system.

Positive

• Acquisition of 17.647% stake in CCB Pension Management enhances global presence.
• First international investment in a Chinese bank-sponsored pension firm, opening new market opportunities.
• Partnership strengthens ties with CCB and Social Security Fund of China, promoting retirement solutions.
• Transaction is immediately accretive to earnings, indicating potential for positive financial impact.

Negative

• None.

Expanding global footprint will provide Chinese customers access to retirement solutions

DES MOINES, Iowa--(BUSINESS WIRE)-- Principal Financial Group^®, a leading global financial services provider, today announced an exciting new chapter in their ongoing expansion of their global pension footprint as Principal^® acquires a minority ownership stake (17.647%) in China Construction Bank (CCB) Pension Management Co., Ltd. (CCBP), CCB’s pension business with the Social Security Fund of China (SSF). CCB will remain as the majority shareholder of CCBP with a 70% interest and an additional minority stake (12.353%) held by the SSF.

Principal is the first international company to invest in a bank-sponsored Chinese pension company, with CCB Pension Company being a special pilot allowing end-to-end pension services throughout China. Becoming a shareholder with CCB and SSF in the pension company has long been an important priority for Principal, as it enables the firm to better serve their customers in China and help more people around the world achieve long-term financial security.

“People are living longer than ever. In China—as in other markets—the percentage of the population that is at retirement age will more than double by 2050,” said Thomas Cheong, president, Principal Asia. “As an organization focused on financial security, we understand the importance of having access to retirement products and solutions – our relationship with CCB and SSF allows us to help provide that to customers in China. The enhanced partnership with CCB combines the global pension and investment expertise of Principal with CCB's extensive distribution network. It further strengthens the relationship between the two financial companies who have been partners since launching CCB Principal Asset Management in 2005 and enhances the long-standing cooperation between Principal and the Social Security Fund of China.”

This acquisition provides Principal with a significant foothold in the growing employer-sponsored pension segment of China's pension market and the emerging individual retirement market, as the world’s most populous nation encourages its aging population to save more for retirement. The transaction with CCBP is immediately accretive to earnings. Principal plans to work with CCB and SSF, through enhanced cooperation among the shareholders, to contribute to the multi-pillar pension system and the financial well-being of the vast population of China.

About Principal Financial Group^®

Principal Financial Group^® (Nasdaq: PFG) is a global financial company with 19,000 employees¹ passionate about improving the wealth and well-being of people and businesses. In business for more than 140 years, we’re helping more than 55 million customers¹ plan, protect, invest, and retire, while working to support the communities where we do business, and build a diverse, inclusive workforce. Principal^® is proud to be recognized as one of America’s 100 Most Sustainable Companies², a member of the Bloomberg Gender Equality Index, and one of the “Best Places to Work in Money Management³.” Learn more about Principal and our commitment to building a better future at principal.com.

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¹ As of September 30, 2022
² Barron’s, 2022
³ Pensions & Investments, 2022

View source version on businesswire.com: https://www.businesswire.com/news/home/20230106005089/en/

Media Contact:

Teresa Thoensen email: Thoensen.teresa@principal.com

Fei Li email: li.fei@principal.com

Source: Principal Financial Group

FAQ

What is the significance of Principal Financial Group's acquisition of CCB Pension Management?

The acquisition provides Principal with a foothold in China's pension market, enabling access to retirement solutions for a growing aging population.

How much stake did Principal Financial Group acquire in CCB Pension Management?

Principal acquired a 17.647% minority stake in CCB Pension Management.

Is Principal Financial Group the first international company to invest in CCB Pension Management?

Yes, Principal is the first international company to invest in a bank-sponsored Chinese pension company.

How does this acquisition impact Principal's earnings?

The transaction is immediately accretive to earnings, suggesting a positive impact on Principal's financial performance.

What role does CCB play in the new partnership with Principal?

CCB retains a 70% majority stake in CCB Pension Management, enhancing distribution capabilities for retirement solutions.