China Life seeks mainland listing

By Dune Lawrence


China Life Insurance, the biggest life insurer in the country, said Tuesday that it would seek to list in Shanghai in a $3.61 billion initial offering to tap the surging mainland Chinese stock markets.

China Life, now listed in Hong Kong, did not specify a price range or when it intends to sell up to 1.5 billion yuan-denominated shares on the Shanghai Stock Exchange, according to a statement on the Web site of the China Securities Regulatory Commission. The regulator intends to start reviewing the request Friday.

"It just enlarges their capital base," said Tat Auyeung, a fund manager at Apex Capital Management in Hong Kong. "The A-share market is a very good way for them to raise money," he said referring to yuan-denominated share listed on the mainland.

The Chinese securities regulator last week published new rules governing initial public offerings by insurers, paving the way for China Life to raise money on the mainland stock market, which has more than doubled in size to almost $806 billion this year.

The insurer has increased its investments in mainland companies. Last week, it announced that it was buying a 32 percent stake in China Southern Power for $4.5 billion.

The Chinese stock market capitalization has more than doubled this year to $806 billion as the government has encouraged the biggest Chinese companies to sell shares, reviving investor demand after a four-year slump. Ping An Insurance and Bank of Communications are among the Hong Kong-traded companies that plan to seek mainland listings next year.

"The trend for Hong Kong-listed companies to sell shares on the domestic stock markets is only going to get bigger," said Phillip Chan, research director at Shenyin Wanguo Securities in Hong Kong. "The A-share markets are so liquid now."

China has pushed companies including Industrial & Commercial Bank of China and Bank of China to sell shares in Shanghai as well as Hong Kong to help develop the mainland capital markets, improve corporate governance and increase investor choice. The nation lifted a 12-month ban on share sales in May.

Seven Hong Kong-listed companies including PetroChina, the largest Chinese oil company, may raise a combined 105 billion yuan, or $13 billion, in the coming months, Chan said.

The mainland stock markets rank 13th in the world, while its economy ranks fourth.

The Shanghai Composite index has risen 89 percent this year, while the Shenzhen Composite index, which tracks the smaller of the two mainland stock markets, has gained 81 percent. The Shanghai index slumped 44 percent from 2001 through the end of 2005.

The stock markets in mainland China have overtaken South Korea, Taiwan and India by capitalization this year, according to data compiled by Bloomberg. Shares of Industrial & Commercial Bank, the world's fourth-largest by market value, have risen 35 percent since they started trading in Shanghai on Oct. 26, for a capitalization of $180 billion.

China Life appointed China Galaxy Securities and China International Capital to arrange its offering of A- shares, according to a statement on the Web site of the China Securities Regulatory Commission.

China Life shares rose 1.6 percent to 19.02 Hong Kong dollars at the close of trading Tuesday. The stock has almost tripled this year.

The Chinese insurance market grew 14 percent to 430.9 billion yuan in premium income in the first nine months of 2006 from last year. China Life's premium income rose 18 percent in the first 10 months to 160 billion yuan, it said Nov. 17.

Ping An Insurance, the second- largest Chinese insurer, may sell as many as 1.15 billion new shares in Shanghai next year, the company, which is based in Shenzhen, said in September.

Bank of Communications, the fifth- largest Chinese bank, said last month it may sell as many at 4.5 billion shares in China next year.