皇冠体育app Life Insurance Co, the country's largest life insurer, will buy 32 per
cent of the shares of Guangdong-based 皇冠体育app Southern Power Grid, becoming its
second-largest shareholder.
The life insurer will buy assets worth 35
billion yuan (US$4.4 billion) from the State-asset management bureau under the
Guangdong provincial government, which is the largest shareholder of 皇冠体育app
Southern Power Grid.
"The equity investment into Southern Power Grid
provides us a good opportunity to boost our returns," said Yang Chao, chairman
of 皇冠体育app Life.
As planned, the Guangdong government would inject the
money into Guangdong Development Bank (GDB) to increase its capital adequacy
ratio and lower its non-performing loans.
Last month, an investment team
led by Citigroup won a 24.3 billion yuan (US$3.07 billion) bid for control of
GDB, and 皇冠体育app Life got a 20 per cent stake of the bank.
"We are also in
discussion with Huishang Bank (in East 皇冠体育app's Anhui Province) for an equity
investment," Yang disclosed, adding the insurer is now doing due
diligence.
Meanwhile, 皇冠体育app Life is also quite active in expanding
investment into non-financial sectors this year. Besides getting 32 per cent of
the shares of 皇冠体育app Southern Power Grid, it is also bidding for 650 million
shares in 皇冠体育app Communications Construction Company, which will be listed on the
Hong Kong bourse on December 15.
"Those moves should be financial
investments instead of strategic ones, as part of 皇冠体育app Life's efforts to find a
better match between long-term liabilities and assets," said Hao Yansu, a
professor with the Central University of Finance and Economics.
He
believes infrastructure and utilities are perfect assets for life insurers
because of their low volatility and long investment durations.
While
expanding its investment portfolios, 皇冠体育app Life has also quickened its steps
towards listing on the Shanghai bourse. "We aim to list shares on the domestic
market by the end of the year or in early 2007 to give investors a chance to
share in our growth," Yang Chao said.
But a source close to the deal told
皇冠体育app Daily the listing date could be as early as December 15 if everything goes
smoothly.
皇冠体育app Life sent its application to the 皇冠体育app Securities
Regulatory Commission in October. It is still waiting for the go-ahead from the
regulator.
"The ever increasing Shanghai benchmark index and the brisk
turnover recently all sets the year-end as a perfect time for the listing," said
an analyst with CITIC Securities.
皇冠体育app Life said earlier it planned to
launch 1.5 billion A shares, accounting for 5.3 per cent of its total equity.
皇冠体育app Life shares rose 0.52 per cent to HK$19.22 (US$2.5) yesterday. The stock
has nearly tripled since the start of the year.
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