China Life IPO Expected to Raise up to $3.6 Billion

December 27, 2006

China Life Insurance Co. says it will set a price this week for an initial public offering on Chinese markets that could raise up to 28 billion yuan (US$3.6 billion; euro2.8 billion).

The company would become the first Chinese insurer traded on China’s domestic stock exchanges. China Life shares already are traded in the United States and in Hong Kong, a Chinese territory that is treated as a foreign economy for regulatory purposes.

Chinese officials are trying to develop the country’s stock markets by encouraging bigger companies to list shares on them following a wave of IPOs that have raised billions of dollars from investors abroad.

In a statement issued through the Hong Kong Stock Exchange, China Life set a price range of 18.16 to 18.88 yuan (US$2.32-US$2.41; euro1.77-euro1.84) per share for up to 1.5 billion shares. It said a final price would be announced Thursday and that it aimed for a listing in Shanghai by Jan. 11.

Analysts said they expect China Life to price shares at the top end of the range, taking advantage of strong growth prospects and the relative scarcity of insurance stocks on mainland exchanges.

The company is to issue “A” shares that are restricted to trading by Chinese citizens or a small number of foreign investors that have been approved to invest in domestic shares.

Forty percent of the shares are earmarked for strategic investors who have not been publicly identified.

The China Insurance Regulatory Commission said in a forecast in October that revenues for Chinese insurers should exceed 1 trillion yuan by 2010, more than double 2005’s 493 billion yuan.

Regulators expanded investment options for insurance companies this year by letting them buy stakes in commercial banks.

China Life recently paid 5.7 billion yuan for a 20 percent stake in Guangdong Development Bank as part of a consortium led by U.S.-based Citigroup Inc.

China Life is the latest in a string of Chinese companies that are turning to domestic stock markets to raise money following successful IPOs abroad.

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