China Life Insurance Co, the country's largest life insurer, is planning to sell as many as 1.5 billion local currency A shares to boost its capital.

 

The Shanghai listing would make China Life the first domestically listed insurer.

 

The domestic IPO, consisting of 5.3 percent of China Life's enlarged share capital, is scheduled to open for subscription next Monday.

 

The proceeds from the IPO will be used to replenish its capital "or channel it for other purposes that are approved by regulators," the company said in its prospectus.

 

The Beijing-based insurer said yesterday it would start consultations with investors to determine the share price.

 

An indicative price will be announced on Friday and the final price and results of the share offer will be determined Thursday next week, the insurer said in the prospectus.

 

China Life's Hong Kong-listed H shares, which have soared more than three times since the beginning of this year, closed at HK$22.05 (US$2.83) yesterday, down 2.86 percent.

 

If the A shares are priced at that level, the IPO could raise over 32 billion yuan (US$4 billion), making it the second biggest domestic IPO this year. The share offer, analysts say, is widely expected to be priced at a discount of around 10 percent to the H shares, a move aimed at ensuring its success.

 

China Life, which is also listed in Hong Kong and New York, plans to allocate about 40 percent of the shares to strategic investors, with 22.5 percent slated for institutional investors and the remaining shares for retail investors.

 

But some of the institutional allocation may be shifted to the retail portion if demand there is particularly strong, the life insurer said yesterday.

 

China Life, now the world's third-largest insurer by market value, may begin trading its shares on the Shanghai Stock Exchange on January 11 at the latest, according to Shanghai Securities News reports.

 

China International Capital Corp and China Galaxy Securities are lead underwriters for China Life's share sale. Citic Securities is acting as its financial adviser.

 

China Life has 648,000 insurance sales staff and 12,000 sales outlets across the country, occupying about 49.4 percent of the market share in the first half of this year, the company said.

 

The life insurer made 5.45 billion yuan (US$695 million) in net profit last year, up from 2.91 billion yuan (US$371 million) in 2004.

 

China Life chalked up 5.81 billion yuan (US$741 million) in net profit in the first half of this year, a whopping year-on-year increase of 61.67 percent, the company said.

 

A number of local insurers are planning to make domestic listings, encouraged by the bullish domestic stock market.

 

Ping An Insurance, China's second-largest life insurer, is planning to issue 1.15 billion A shares in the first quarter of 2007.

 

Ping An, which is also listed in Hong Kong, is expected to raise an estimated US$4.5 billion if its price is set according to its current Hong Kong share price.

 

China Pacific Insurance (Group) Co (CPIC) and China Reinsurance and Taikang Life Insurance are also planning to list on the domestic bourse.

 

(China Daily December 20, 2006)