China Life Insurance

New China Life puts off US$1b IPO

PUBLISHED : Friday, 09 March, 2007, 12:00am
UPDATED : Friday, 09 March, 2007, 12:00am

Delay stems from protracted probe into the firm and its ex-chairman over 800m yuan fund misuse

New China Life Insurance will delay its initial public offering of up to US$1 billion until at least 2009 due to a protracted investigation into the firm and the deposing of its chairman, said one of its key shareholders.

The mainland's fourth-largest coverage insurer will first complete the reshuffle of its board before deciding on its listing plan and other strategies, said Zhang Hongwei, chairman of Orient Group, one of the mainland's largest privately-owned firms, yesterday. Orient holds 13 per cent of the insurer through two subsidiaries.

When it finally does an IPO, New China Life might do so simultaneously in Shanghai and Hong Kong, according to Mr Zhang.

'Dual listing is a very common practice right now,' he said.

The Beijing-based insurer has been talking about the listing for years.

In 2005, the company called off a planned listing on the mainland exchanges because of the ban on the new domestic share offerings.

Instead, the insurer looked to go public in Hong Kong. But the next year, however, an investigation into it chairman pushed off those plans.

In the meantime, its two largest rivals, China Life Insurance and Ping An Insurance, which have already been listed in Hong Kong, completed their stock offerings in Shanghai recently, becoming the first two listed insurance compmanies in the city.

China Pacific Insurance Group, the nation's third-largest insurer, planned to raise at least US$1 billion in a Hong Kong initial offering, sources said earlier.

Since November, the China Insurance Regulatory Commission has had an investigation team probing the insurer for alleged misuse of 800 million yuan after removing Guan Guoliang, the chairman and a star entrepreneur. The investigation has yet to be completed.

A PricewaterhouseCoopers audit showed the insurer had failed to report an 800 million yuan in loan guarantees to three firms, Caijing Magazine reported last year.

A 500 million yuan guarantee to Beijing developer Chengzhong Plaza was signed by Mr Guan and an additional 1.34 billion yuan was exchanged between New China Life and Chengzhong for which there was no legal documentation, the magazine said.

Source said last year that New China Life would raise up to US$1 billion in an initial public offering in Hong Kong this year.

The company sold one billion yuan in premiums in 2005, higher by 112 per cent than a year earlier, according to the latest figures from company's website. Its total assets made up of 34 branches and 779 outlets were valued at 67.2 billion yuan.

Zurich Insurance, Switzerland's largest insurance company, is the mainland firm's largest investor with a 20 per cent stake.

Meiji Yasuda Life Insurance owns 4.5 per cent, and International Finance Corp, the private sector arm of the World Bank, owns 1.5 per cent. The other shareholders are domestic companies, including Baosteel Group and Orient Group.