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China Pacific may raise $3.3b in HK float
(China Daily/Agencies)
Updated: 2009-12-08 08:00
China Pacific Insurance (Group) Co and the country's pension fund plan to raise as much as HK$25.93 billion ($3.3 billion) in a Hong Kong share sale that may be the city's second-biggest this year, four people familiar with the plan said.
The nation's third-largest insurer and the National Social Security Fund are offering 861.3 million shares at HK$26.8 to HK$30.1 apiece, said the people, declining to be identified. The sale is made up of 90.9 percent new shares from the company, with the rest offered by the fund.
The offer values China Pacific at a discount of at least 27 percent to its two bigger competitors, based on estimates of embedded value by banks involved in the sale, two of the people said. The insurer, partly owned by Carlyle Group, will replenish capital after the company and rivals accelerated sales of lower-margin policies to boost market share.
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The company made a 1.7 billion yuan profit in the third quarter, reversing a loss a year earlier as the domestic stock rally boosted returns.
The 861.3 million shares being sold represent a 10.2 percent stake in the company. The share sale values China Pacific at 1.7 times to 1.9 times next year's embedded value as estimated by banks involved in the sale, said two people familiar with the sale.
China Life Insurance Co, the nation's biggest insurer, trades at about 2.8 times and Ping An Insurance (Group) Co, the second largest, at 2.6 times.
Embedded value estimates a company's net worth excluding new business.
"The market demand is fairly good now," said Olive Xia, an analyst at Core Pacific Yamaichi.
Shanghai-based China Pacific rose by its 10 percent daily limit in Shanghai on Friday, possibly reflecting investor expectations that demand for the Hong Kong offering will be strong, according to Xia.
The insurer plans to price the shares around Dec 16, said people familiar with the plan. Corporate investor including Allianz SE will take a combined $395 million of the shares. The sale may be expanded to 990 million shares to meet demand, the three people said.
The stock is scheduled to start trading on Dec 23. Allianz, Europe's largest insurer, alone will be buying $150 million of the shares, according to two people.
