Shareholder offloads $125 million of China Life shares

Tight discount sees bulk of shares going to long-only funds
An existing institutional shareholder has sold HK$970.1 million ($125 million) worth of China Life Insurance shares in a move to cash in on the strong share price gains in the past four months.

Citigroup acted as sole bookrunner for the deal.

The 99.5 million shares were offered in a range of HK$9.75 to HK$9.85, which represented a discount of zero to 1% to WednesdayÆs (March 29) close of HK$9.85.

As could have been expected with such a tight offer range, the placement price ended up being fixed at the bottom of the range.

The book was closed shortly after it was fully subscribed, and by this time it was said to have attracted 15-20 investors. Given the tight discount, the sale drew modest interest from hedge funds and about 85% of the shares went to long-only accounts.

According to people familiar with the transaction, about half of the shares were placed into Europe, while 40% when to Asian investors and about 10% to the US.

The placement accounted for only 1.34% of the outstanding share capital and since it was done virtually at market price, it did not have much impact on the share price.

The stock traded up 2.5% yesterday following the deal to an intraday high of $10.10, but retreated in afternoon trading and closed unchanged at HK$9.85.

It hit an all time high of HK$10.20 on Tuesday after rallying 61.5% since the beginning of December as the market believes it will be one of the key beneficiaries once ChinaÆs National Social Security Fund gains the final approval to start investing in Hong Kong stocks. Like other domestic-oriented companies it is also gaining on speculation of further appreciation in the renminbi.

The share price is up 171% since China LiufeÆs initial public offer in December 2003, making it a tempting sell for original investors who are still sitting on their shares.

¬ Haymarket Media Limited. All rights reserved.