Ping An Taps Market Again, Eyes $4 Billion
Ping An Insurance, the world's second-biggest life insurer by market value, said on Tuesday it plans to raise up to 26 billion yuan ($4.1 billion) by selling convertible bonds to replenish capital amid economic uncertainty.
The move, which surprised many analysts, came just nine months after the fast-expanding insurer raised $2.5 billion through a private placement in Hong Kong, underlining the urgency of capital-raising.
"The global economic situation remains tough and complicated amid the lingering Eurozone debt crisis, while the domestic economy faces the risks of a slowdown," Ping An , partly owned by HSBC , said in a statement to the Shanghai Stock Exchange.
"Economic uncertainty may persist for a period of time in the future, which makes it necessary for the company to further replenish capital and ward off potential risks."
Ping An, which aims to become a financial conglomerate operating insurance, banking and asset management under one roof, added that rapid business expansion also exerted pressure on its capital.
Chinese insurers will need more than 110 billion yuan of external funding to fuel their rapid development in the next three years, rating agency Standard & Poor's has said.
New China Life Insurance, the country's third-biggest life insurer, braved the volatile stock market earlier this month, raising $1.9 billion in a dual listing in Hong Kong and Shanghai .
Ping An said that the fundraising in Shanghai would potentially boost the company's solvency adequacy ratio to 194.9 percent from 170.7 percent.
At the end of September, Ping An's banking unit, Shenzhen Development Bank, had a capital adequacy ratio of 11.5 percent, which is a relatively low level, it said.
The fundraising plan still needs shareholder and regulatory approval, Ping An said.