Printer Friendly

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 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 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 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 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. 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 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 in New York will be "LFC." In Hong Kong, the company will be listed under the number 2628.

According to, 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 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 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
COPYRIGHT 2004 A.M. Best Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2004, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Highlights from BestWeek; China Life Insurance Co. Ltd.; China Life Insurance Co. Ltd.
Author:Pilla, David
Publication:Best's Review
Geographic Code:9CHIN
Date:Jan 1, 2004
Previous Article:Experts forecast active hurricane season.
Next Article:General Accounting Office denies protest.

Related Articles
Waking tiger: with 59 million people online, China's e-commerce potential is enormous for insurers. (E-Commerce).
Best's rating changes.
AIG buys stake in Chinese property/casualty insurer.
Best's Rating Changes.
Cigna launches life insurance joint venture in China.
Best's rating changes.
Best's rating changes.
China's Ping an life seeks Hong Kong listing.
Best's rating changes.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters