IFC proposes $100m investment in China insurance firm
The International Finance Corporation (IFC), the investment arm of the World Bank, is considering an equity investment of up to RMB690 million ($100 million) in Chinese insurance firm Union Life Insurance.
The size of IFC’s proposed stake has not been revealed, though according to a disclosure the development finance institution (DFI) will take a seat on Union Life’s board. IFC plans to help the company improve its corporate governance and risk management policies and diversify its portfolio by introducing overseas investment opportunities.
Founded in 2005 and headquartered in Beijing, Union Life operates in 26 provinces in China, with 78,000 agents serving nearly four million long-term customers. Its primary backer is the domestic conglomerate Zhongfa Group, which holds a 46% stake, with most of its remaining shares held by various Chinese enterprises. Currently Japanese insurance firm Taiyo Life Insurance is the company’s sole non-Chinese backer.
With China’s elderly population increasing and smaller family sizes impairing traditional family-based support systems, IFC sees insurance as vital to building the country’s social safety net and ensuring proper care for the elderly. The DFI also hopes that by strengthening Union Life’s investment capabilities it can help transform domestic savings into long-term risk capital.
IFC is active in China as both an LP and an investor in its own right. In addition to supporting the latest fund of Hosen Capital and the debut vehicle of Long Hill Capital Management, the DFI also contributed $25 million as a cornerstone investor in the Hong Kong IPO of Minsheng Education Group and is considering a RMB130 million commitment to listed bank Qiongzhong Rural Credit Cooperative.
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