China Pacific gets watchdog's approval for Hong Kong IPO

A branch of China Pacific Insurance in Shanghai. The insurance company has been approved to issue up to 990 million overseas-listed foreign shares in Hong Kong. Photo: CFP

By Chen Xiaomin

China's third-largest life insurer China Pacific Insurance (Group) has received the China Securities Regulatory Commission's (CSRC) green light to issue stocks in Hong Kong.

China Pacific, partly-owned by US investors Parallel Investors Holdings and Carlyle Holdings Mauritius, plans to raise at least 23.3 billion yuan ($3.4 billion) to finance its insurance business development.

The company said in a statement filed with the Shanghai Stock Exchange that CSRC had allowed it to issue up to 990 million overseas-listed foreign shares.

Upon completion of the common stock issuance, the company may list shares in Hong Kong, the statement added. The Shanghai-based insurer said earlier it would price its Hong Kong IPO at no less than 23.52 yuan ($2.44) per share.

Sun Ting, Shanghai-based insurance analyst with Shenyin & Wanguo Securities, said the approval process is quicker than expected and China Pacific will float shares in late December.

"China Pacific benefits from its foreign capital background and a stock market revival this year. The government support is another big push to build Shanghai into an international financial and maritime trade center," Sun said.

The company suspended a Hong Kong share offer plan last year due to the global financial crisis, but started over this July, announcing it planned to issue no more than 1 billion stocks in Hong Kong. And it was given the go-ahead by the China In-surance Regulatory Commission (CIRC) in September.

Sun said she expects a huge increase in the company's actual capital after the IPO.

Sun said China Pacific would use the funds to replenish its capital base and expand its core business, insurance, adding plans like life insurance tax credits. Some of the capital may go to its subsidiary Changjiang Pension Insurance.

Changjiang Securities struck a similar note in a report saying the international financial center and maritime center in Shanghai under development would also provide China Pacific many new opportunities, perhaps for mergers and acquisitions.

As of June 31, China Pacific's solvency adequacy ratio, the key measure of an insurer's stabil-ity, was a stalwart 224 percent for life insurance and 177 percent for property insurance. Its net assets, however, are only valued at 21.8 billion yuan ($3.19 billion), which is not enough for large-scale expansion, according to experts.

The listing plan still needs approval from the Hong Kong exchange, the company noted.

The company's Shanghai-listed A shares rose 2.13 percent to 25.90 yuan ($3.79) Wednesday, outperforming the 1.28 percent rise of finance stocks on the whole.
 

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