Ping An wins backing for 120b yuan cash call

PUBLISHED : Thursday, 06 March, 2008, 12:00am
UPDATED : Thursday, 06 March, 2008, 12:00am

Ping An Insurance (Group) won support yesterday from an overwhelming majority of shareholders for its controversial stock offering, after the management indicated interest in acquiring European assets.

Shareholders of the country's second-largest insurer voted on its mammoth funding plan, which it announced in January, to raise about 120 billion yuan (HK$131.63 billion) in an issue of shares and convertible bonds.

Out of valid shares totalling 5.653 billion units - netting crossholdings of A and H shares - 90.48 per cent backed the deal, the largest mainland capital-raising exercise and the sixth-largest in the world.

Altogether, 90.48 per cent out of 4.054 billion A shares and 97.77 per cent out of 1.638 billion H shares voted in favour of the plan.

Ping An executive director and group president Louis Cheung Chi-yan said the company was seeking overseas expansion opportunities.

'We'd like to look for assets in the United States and Europe, where the euro has strengthened against the US dollar by about 10 per cent,' Mr Cheung said during the extraordinary general meeting in Shenzhen.

In November last year, Ping An acquired a 4.2 per cent stake in Dutch-Belgian financial services group Fortis.

'Of course, we care less about short-term fluctuations [in currencies] and more about making sure that we have a diverse portfolio,' Mr Cheung said.

Speculation in the market has it that Ping An plans to buy stakes in Britain's largest insurer Aviva and its rival Prudential. Banking giant HSBC Holdings, which owns 16.8 per cent of Ping An, is also said to be a target.

'The US subprime crisis has caused the valuations of many companies to shrink, but Europe is definitely a market of top priority,' said a state-owned shareholder of Ping An that holds about 30 million A shares.

'European countries have more favourable merger and acquisition regulations for mainland companies than the US.

'Louis [Cheung] worked in Europe for a long time and has built up a network and resources for acquisitions.'

After Ping An became Fortis' largest single shareholder, Mr Cheung was appointed to the Fortis board.

'So far, returns from our investment in Fortis are stable. Our target will have been met if Fortis maintains an annualised return of 6 to 7 per cent,' said Mr Cheung.

The insurer was also looking for banks domestically and overseas to fill gaps in its operations, said Ping An chairman Ma Mingzhe. 'It would be good to allow banks to join the insurance sector and allow the pie to grow bigger.'

Jerry Lou, a China strategist at Morgan Stanley, said now was a good time for mainland companies to make long-term overseas investments. 'Even if the US subprime crisis has yet to bottom out, will they find so many choices at such reasonable prices later?'