Chinese Insurer To Raise $22 Bn

Beijing: Ping An Insurance, China''s second-largest insurer, is looking at mobilizing nearly $22 billion to help fund aggressive foreign acquisition plans in the biggest-ever share sale in mainland China. The size of the share issue three times the amount the company raised in its initial public offering in Shanghai a year ago indicates that Chinese companies want the financial resources to acquire or buy into weakened western rivals, according to analysts and bankers. Many US and European financial services companies have seen their share prices tumble after billions of dollars in sub-prime-related losses. Ping An plans to issue 1.2 billion new shares to public and institutional investors in a secondary placement in Shanghai, raising more than $16 billion based on Friday''s closing price of Rmb98.21. The insurer, 16.8 per cent-owned by UK bank HSBC, also plans to sell up to $5.7 billion worth of Shanghai-traded six-year convertible bonds with detachable warrants, further diluting existing shareholders'' stakes. HSBC, which has already seen its stake diluted from 19.9 per cent at the IPO, said it could not participate in the A-share issue as it is restricted to domestic investors.

Ping An said proceeds from the fundraising will be used for acquisitions that are significantly beneficial to the group''s expansion strategies and operation efficiencies and compatible with its insurance, banking and asset management activities. The financial sector in the US and Europe has been depressed for a while now and this presents a buying opportunity for Chinese firms like Ping An, said Steven Sun, Asia-Pacific equity strategist at HSBC. Domestically I can''t see what sort of target they could buy besides a couple of medium-sized banks. Ping An''s proposed share and bond sale must still be approved by regulators and a two-thirds majority of shareholders at a meeting scheduled for March 5.