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Ping An set to launch second-biggest IPO
29/1/2007 16:43

Ping An Insurance (Group) Co., the mainland's No. 2 life insurer, is set to launch the country's second-largest domestic IPO to raise up to US$5.55 billion as regulators review its Shanghai offering application Tuesday.

Ping An, 19.9 percent-owned by HSBC, has applied to the China Securities Regulatory Commission to issue up to 1.15 billion A shares for a Shanghai listing, it said in a prospectus published on the stock watchdog's Web site.

Based on the closing price of Ping An's Hong Kong-listed shares at HK$37.60 (US$4.83) Friday, the offer could raise up to US$5.55 billion, exceeding larger rival China Life's US$3.63 billion Shanghai offer last month.

China's domestic initial public offering (IPO) record was set by Industrial and Commercial Bank of China (ICBC) last October, which raised US$6 billion.

More major mainland companies already listed in Hong Kong are returning to tap Shanghai's surging stock market, where the main index soared 130 percent last year on a series of structural reforms that boosted investor confidence.

Industrial Bank is raising about US$2 billion in a Shanghai IPO, which drew 1.16 trillion yuan (US$149 billion) in subscriptions from retail and institutional investors, a record for a domestic IPO.

Hong Kong-listed Bank of Communications, a partner of HSBC, aims to raise about US$2.6 billion through a listing in Shanghai in March, a source familiar with the plan said.

The actual value of proceeds raised by Ping An could be less than US$5.55 billion as A shares have been usually offered at a discount to their Hong Kong equivalents.

Ping An said it would use the proceeds to expand its capital base and other purposes approved by regulators.

Many A shares are now trading at a sharp premium to their Hong Kong counterparts, prompting more Hong Kong-listed mainland firms to tap domestic investors.

The price of China Life's A shares, listed Jan. 9, has more than doubled since its IPO. Its A shares closed at 40.26 yuan Friday, 73 percent more expensive than its Hong Kong stock.

Analysts say China Life's A-share surge is fueled by optimism over the growth potential of China's insurance industry. More Chinese are expected to buy insurance policies as the government dismantles a cradle-to-grave welfare system in the State sector.

Of the country's 1.3 billion people, less than 4 percent have insurance coverage.

For the first nine months of 2006, Ping An posted a net profit of 3.677 billion yuan, far exceeding its full-2005 earnings of 3.338 billion, it said in the prospectus.

Ping An collected 37.3 billion yuan in premiums in the first half of 2006 to command a domestic market share of 16.5 percent, second only to China Life's 111.4 billion yuan and 49.4 percent.

Goldman Sachs Gaohua Securities Co., Galaxy Securities and CITIC Securities will be the lead underwriters, it said.

The Shanghai offer, at its maximum size, would account for 15.66 percent of Ping An's expanded capital of 7.345 billion outstanding shares, it said.



Shenzhen Daily/Agencies