China's asset management company JD Capital has secured a major foothold in Hong Kong's insurance market when it acquired the Hong Kong life insurance business of Belgian insurer Ageas.

JD Capital, or Beijing Tongchuangjiuding Investment Management Company, is paying HK$10.69 billion (US$1.37 billion) for the acquisition, or 1.3x first half 2015 book value. Based on the first half-year 2015 figures, and still subject to closing adjustments, the transaction is expected to have an impact of the net results of around 450 million euros (US$506 million) at the time of closing. The transaction is expected to be completed within the first half of 2016 and is subject to regulatory approvals.

Ageas acquired what used to be called Pacific Century Insurance in 2007 and rebranded the company to Ageas. It has since then developed into a strong agency business with more 2,500 professional financial advisers as well as key strategic partnerships. It has maintained a solid market position with gross inflows of 481 million euros in 2014 and 269 million euros in the first half of 2015.

"The decision to sell our business in Hong Kong follows a strategic review of our Asian activities in which we concluded that it is in the group's best interest to realign our strategy towards the fast growing emerging markets of Asia," says Ageas CEO Bart De Smet in a statement.

While the Ageas acquisition marks JD Capital's initial foray into the life insurance business, it has set a clear strategy around the insurance business. There is a view that the group wants to build a financial services franchise and insurance is a core component of that.

JD Capital, which is not in the original list of parties to contact by Ageas in the auction process, has committed money to a China insurance buyout fund that China Insurance Regulatory Commission is initiating. It bought a few insurance adjuster business in China and has lodged a license application in China for a life insurance company.

While Hong Kong can be considered a developed life insurance market, it still offers attractive proposition for large insurance companies. One area of growth is the robust sales of insurance products to mainland Chinese coming to Hong Kong who are attracted to Hong Kong style life insurance products.

Amid the Hong Kong asset disposal, Ageas says it remains committed to Asia and will further strengthen its business in the region by focusing on the six growth markets in China, India, Malaysia and Thailand, where it has successful joint ventures, and in the Philippines and Vietnam, where it recently established partnerships.

JD Capital will fund the acquisition with the proceeds of the recently-completed private placement, which gives the group adequate equity to undertake the transaction.

Citi advised JD Capital in the transaction, while Morgan Stanley was the financial adviser for Ageas.

Established in 2007, the Beijing headquartered JD Capital is listed on the Chinese National Equities Exchange. It operates a variety of financial services business, including one of the largest private equity investment companies in China, whose investors include Temasek Holdings, Allianz, Partners Group and other multinational institutions.