China Insurance plans Hong Kong listing

Swiss Re, the world''s second largest re-insurance company, could take up a 4% stake in the Hong Kong insurance unit, which is likely to be valued at HK$1.03 billion.

China Insurance International Holdings (CIIH), the Hong Kong unit of China Insurance Group, could raise around HK$412 million ($53 million) when it makes an initial public offering on the Hong Kong Stock Exchange later this month. But that's not the end of the story. Swiss Re, the worldÆs second largest re-insurance company, has agreed to take up 28.3% of the issue, according to the underwriter of the deal.

CIIH plans to offer a total of 297.2 million shares, which will be priced between HK$1.22 and HK$1.44 each. The issue represents 35% of the companyÆs enlarged share capital.

BNP Prime Peregrine will underwrite the share sale, which has been approved by the Chinese government.

According to BNP, 178.32 million new shares will also be on offer. The company is setting aside 170.5 million shares for institutional investors; 42.63 million shares for the public; and 84 million shares for its strategic investor Swiss Re, which will then have a 4% stake in the entity. Cheung Kong, the listed flagship of Hong Kong tycoon Li Ka-Shing, and Sun Hung Kai Properties will together take up 25.467 million of the shares earmarked for institutional investors.

Bookbuilding started last Monday and ends 23 June, while the IPO will run from 20 June to 23 June. China Insurance will be listed on the mainboard under the stock code 966 on 29 June.

Creating a new environment

CIIHÆs move is a significant move for ChinaÆs financial services industry, analysts say. The listing would allow China Insurance Group - CIIHÆs ultimate parent û to become the first mainland insurance firm to list its assets overseas. China Insurance Group is one of the countryÆs four state-owned insurance companies, with assets of more than HK$18 billion. It provides a variety of services including general insurance, life insurance and re-insurance outside China.

The listing of CIIH could be the first in a spate of IPOs and capital-raising exercises by ChinaÆs financial services industry, which is undergoing dramatic transformation, analysts say.

Recent newspaper reports highlight the Chinese government's intention to gradually dismantle the legal separation that exists between its banking, insurance and brokerage industries. "We are considering a future in which there is increased cooperation between the bank, insurance and brokerage businesses," Wu Xiaoping, vice-chairman of the China Insurance Regulatory Commission, is reported as saying.

The proposed erosion of regulatory boundaries between different financial services in favour of universal banking has been spurred by Beijing's probable entry into the World Trade Organization later this year.

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