China Life initial public offering reaches $3.5 billion level.
Investors came in droves to get in on the initial public offering of China's largest life insurer, overwhelming the subscription allotment and leading the company to price its stock at the high end of its advertised range.
China Life Insurance Co. Ltd. priced its IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. shares at HK$3.625, an amount that would generate as much as US$3.47 billion when the insurer's stock hit the markets in New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Hong Kong in mid-December. According to People's Daily, the Chinese government's official newspaper, the institutional tranche of the offering was oversubscribed Refers to connecting more users to a system than can be fully supported if all of them were using it at the same time. Networks and servers are almost always designed with some amount of oversubscription, counting on the fact that everybody does not need the service simultaneously. by more than 15 times, with orders topping US$45 billion in worth. The retail tranche was oversubscribed by more than 100 times, the paper said.
"Retail investors will be rewarded for their strong interest with an allocation of as much as 20% of the IPO shares, up from the 5% originally planned," People's Daily said. "Institutional investors will get the remaining 80%."
The paper said the offering price translates into 14 times China Life's estimated earnings for 2004. "This will translate into a valuation of 1.45 times embedded value Embedded Value
A common valuation measure used outside North America particularly in the insurance industry. It is calculated by adding the adjusted net asset value and the present value of future profits of a firm. forecast for 2003, or 1.65 times the company's estimated book value for the year," the paper said.
The share offering will represent about 25% of China Life's total capital. About 91% of the IPO represents new shares, and the remaining 9% will consist of existing shares sold by China Life's parent, China Life Insurance (Group) Co., said People's Daily.
Beijing-based China Life Insurance Co. Ltd., which has approximately half of the market in China and racked up US$5 billion in revenue for the first six months of 2003, launched its U.S. IPO on Dec. 17, with an offering of 139.7 million American depositary shares--each worth 40 "H" shares, or shares to be offered on the Hong Kong Stock Exchange The Hong Kong Stock Exchange (Traditional Chinese: 香港交易所, also 港交所; abbreviated as HKEX; HKSE: 0388 ) is the stock exchange of Hong Kong. . China Life Insurance (Group) Co., the life insurer's controlling shareholder, at the same time offered 13.97 million American depositary shares--10% of the offering by China Life.
In an amended Form F-1 registration statement filed Dec. 8 with the U.S. Securities and Exchange Commission, China Life estimated the initial offering price of its U.S. American depositary shares American Depositary Share (ADS)
Foreign stock issued in the US and registered in the ADR system. at US$15.35 to US$18.80 for each ADS, which translates into HK$2.98 to HK$3.65 a share for individual H shares--or about 38 cents to 47 cents a share, in U.S. currency.
Overall, China Life is offering about 6.15 billion H shares in New York and 323.5 million H shares in Hong Kong. China Life's ticker symbol Ticker Symbol
An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors in New York will be "LFC LFC Liverpool Football Club
LFC Lake Forest College (Lake Forest, IL)
LFC Level of Free Convection (meteorology)
LFC Large Format Camera
LFC Load Frequency Control ." In Hong Kong, the company will be listed under the number 2628.
According to www.IPOHome.com, a Web site published by Greenwich, Conn.-based Renaissance Capital, an IPO research firm serving institutional investors, the China Life IPO would be the largest since financial-services company CIT n. 1. A citizen; an inhabitant of a city; a pert townsman; - used contemptuously.
Which past endurance sting the tender cit.
- Emerson. Group listed in July 2002, raising US$4.6 billion. China Life's IPO would be almost twice as large as that of China Telecom Corp., the last Chinese company to list in New York, which raised US$1.43 billion in November 2002.
The IPO is sponsored by China International Capital Corp., Citigroup, Credit Suisse First Boston Credit Suisse First Boston was originally the trading name of the Financière Crédit Suisse-First Boston, a London-based 50-50 investment banking joint venture formed in 1978 between the First Boston Corporation and Credit Suisse. and Deutsche Bank.
The Chinese insurance markets have been attracting a lot of foreign attention--particularly from life insurers--since the world's most populous country joined the WorldTrade Organization in 2001.
China Life Insurance Co. Fact Box
* Established in Beijing in 1999
* China Life is a wholly state-funded commercial life insurance company
* Sells life, health and accident insurance
* Claims to offer life insurance services to 400 million people
* Employs more than 500,000 people
Source: Benfield Group Ltd.'s China Insurance Market Review