New China Life seeks to raise $1.6b in Hong Kong

The company will offer about 358 million shares at HK$28.20-34.33 apiece, Bloomberg reported, citing two people with knowledge of the transaction. A further 158.5 million shares will be put up for sale in Shanghai, which could bring the full total raised to as much as $3 billion.

The sum is smaller than the $4 billion being touted in August, but even then questions were being asked as to how such a large offering would fare in volatile markets. New China Life's principal rivals, China Life Insurance and Ping An Insurance, have both seen their stock decline by about 38% - compared to a 21% decline in the Hang Seng Index - since the start of the year as solvency ratios declined.

The offering is likely to be bolstered by a $780 million commitment from cornerstone investors including Great Eastern Holdings and Malaysian sovereign wealth fund Khazanah Nasional.

New China Life's leading shareholder is Central Huijin, a unit of China Investment Corp., which holds a 40% stake. Baosteel Group, the world's second-largest steel producer, has a further 20%, while Zurich Insurance is on 15%, having sold 5% to parties affiliated to Nomura and China International Capital Corp. (CICC) in March.

Temasek and Standard Chartered Private Equity jointly invested in the insurer at the end of 2010 - the former has a 3.5% holding to the latter's 1.5%. An affiliate of Hony Capital owns a further 9%.

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• Topics
• Greater China
• Financials
• Financial Services
• IPO
• China
• Temasek Holdings
• Standard Chartered Private Equity
• Khazanah Nasional