China’s Ping An to Raise $4.75 Billion in Hong Kong Share Sale

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Ping An Insurance (Group) Co., China’s second-largest insurer, said it will raise HK$36.8 billion ($4.75 billion) in Hong Kong’s biggest share sale in almost two years to replenish equity and working capital.

The company will sell 594 million new H shares to no more than 10 investors at HK$62 apiece in the placement, according to a statement to the Shanghai stock exchange yesterday.

Ping An joins smaller PICC Property & Casualty Co. and China Taiping Insurance Holdings Co. in tapping the stock market for further growth. China’s top 25 insurers may need more capital as their assets expand and investment appetite becomes more aggressive after the regulator widened their options in recent years, Standard & Poor’s said in a Nov. 17 report.

“The announcement of the successful placement removes the capital overhang on the stock,” Jefferies Group Inc. analysts, led by Hong Kong-based Baron Nie, wrote in a report. “We believe Ping An’s valuation remains attractive, especially given its strong insurance business fundamentals.”

The stock jumped as much as 3.8 percent and traded 2.5 percent higher at HK$66.65, set for the highest close since January, as of 9:57 a.m. in Hong Kong. It is down 4.3 percent this year, while the benchmark Hang Seng Index has fallen 1.6 percent.

The share sale will help Shenzhen-based Ping An meet higher capital requirements expected from regulators, boost its market share in its main business sectors of insurance, banking and asset management, and seize opportunities in Internet finance, the company said in an e-mailed statement.

Ping An said Nov. 7 that it won China Securities Regulatory Commission approval to sell as many as 625.9 million new common shares to overseas investors.

Solvency Ratio

The solvency ratio of its property-insurance unit, which measures its ability to settle claims, stood at 151.9 percent as of June 30, only slightly above the 150 percent regulatory requirement, according to the statement. That for the life unit was 184.3 percent.

Ping An said in October that third-quarter profit jumped 90 percent as banking revenue expanded and a stock-market rally bolstered investment returns. The company sold 26 billion yuan of convertible bonds last year.

PICC P&C, China’s biggest non-life insurer, said last month it plans to raise 7.25 billion yuan in a rights offer in Hong Kong and China. China Taiping, the first overseas-listed Chinese insurer, said in October it will raise as much as HK$6.43 billion in a rights offer.