Letter to Fosun Classmates：“Be an Intelligent Investor”

My fellow Fosun classmates,

I trust that everyone is aware of the Group’s several recent acquisitions, including India’s largest generic pharmaceutical manufacturer Gland Pharma, Germany’s fully-licensed private bank H&A, and Portugal’s second largest commercial bank BCP. 

We also sold the Ironshore business on very favorable terms. In the past, everyone may have been more interested in what we were buying. Today, we have let everyone know Fosun does more than just acquire.

In Fosun’s 24 years, our greatest competitive edge has been our ability to learn, evolve and grow. Fosun is constantly learning from the world’s greatest companies, as well as from our own experiences. We looked to GE and Hutchison Whampoa for examples of good business operations. And we looked to Warren Buffett for his value-investing discipline and ability to secure long-term, low-cost capital for investments. As we continue to learn, Fosun will grow and mature as a world-class investment group with a strong foothold in China.

To achieve this, Fosun has been “combining China’s growth momentum with global resources” and has underpinned our investment operations by the twin drivers of “Insurance + Investment”. We do this because we must better understand and focus on the needs of families for a happy life. That’s why our investment has been focused on “wealth, health and happiness” businesses – and why we have created added value through post-investment management.

As a global investment group, maintaining financial strength and liquidity is very important. Warren Buffett once said the timing of value-investing is important; sometimes you buy, and other times you sell. Fosun’s investment capabilities have won market recognition, but we must be aware that selling is one of the core capabilities Fosun must continue to strengthen. Therefore, last year, we encouraged our core enterprises to actively tap the capital markets. For instance, we announced the spin-off of Fosun Tourism and Culture Group.

Undoubtedly, apart from IPOs, we have many other ways to improve liquidity. During the process of Ironshore’s IPO, Liberty Mutual expressed strong interest in a buyout. Ultimately, we decided to sell to Liberty Mutual, a partner with a strong influence in the global insurance industry – and particularly in the U.S. market.

This transaction has been beneficial to all parties. Liberty Mutual acquires a profitable insurer in a new market while Ironshore will strengthen Liberty Mutual’s specialty business segment. Also, Ironshore will maintain its competitive position from a rating perspective and be positioned for long-term success.

More importantly, Fosun realizes a reasonable return on its investment. This will strengthen our financial strength on one hand, and enable Fosun to accumulate experience throughout the entire value chain of global investment – “investment, financing, management, and exit”. The transaction also demonstrates Fosun's ongoing commitment and focus on maximizing value for its shareholders.

My fellow classmates, I trust everyone is well aware that Fosun must continue to grow at its core. Fosun has been expanding our business presence in all dimensions, and continues to focus on “wisely creating” happiness for our customers. This essence of what we do will never change for any one project.

We must also continue to invest globally. In the future, Fosun will deepen our capabilities to profoundly help major projects in different regions and industries. Geographically, we must pay attention to opportunities in Europe and the U.S. And we also need to look closely at emerging markets – BRICS and others. In addition, we must foster our “Glocal” (Global + Local) strategy to localize our operations when building up our business presence worldwide.

In terms of industry, we must focus on “wealth, health, and happiness”. At the same time, we should also pay attention to C2M, Big Data, AI and robotics. These can enhance social efficiency. This is especially true as Fosun has already built up its strength in operating diverse businesses. We are participating in the restructuring of different industries, and hoping to be at the forefront of the latest developments. This is a significant advantage we have built.

Investment is just the beginning, though. Value is derived through management. Compared to how things have been, nowadays, more and more global enterprises hope to work with Fosun. Why is that? I am sure that it is not because Fosun has become bigger or more influential. Rather, it is because of the efforts and hard work of you guys – our fellow classmates over the past few years. You have provided our invested enterprises with competitive value-added services and have brought a broader and more international perspective to Fosun. People are paying attention to how Fosun can help their businesses. It is my hope that Fosun is becoming an ecosystem, and in this ecosystem, we can deepen our industrial strengths, enhance our global capabilities, share our talent reserves, and generate positive energy to support the constant development and growth for all of you. Ultimately, we can bring a happy life to our customers. Meanwhile, I am emphasizing in this ecosystem, Fosun will make sure to support every invested enterprise in their upstream and downstream value chains. While we are creating business synergy, we will foster inward and outward growth.

In establishing Fosun’s happiness ecosystem, we must also emphasize the cloud strategy and strengthen our middle and back offices. We face uncertainty and possible changes every day – more so than we have before. As a global organization, if Fosun were to still rely on conventional management, we would as extinct as the dinosaurs. That is why One Fosun’s Big Data, cloud strategy, and the middle and back offices, based on this new technology, are the most important task for Fosun over the next few years. We want to integrate our strength, refine our products, and serve our customers.

Lastly, I want to share this. We believe all creative forces are scarce resources, including capital, land, air, and especially our people. This is the energy and positive force behind the survival of our society, and it is something we must cherish. As an organization, Fosun is integrating these scarce forces and energies more effectively to promote the progress of society and to provide more happiness for every family. This is our belief and Fosun's investment philosophy.

Keep moving forward! Thank you!

Guo Guangchang

December 9, 2016