The bank will become the largest shareholder in the mainland insurer
HSBC Holdings is expected to be the single largest investor in China's Ping An Insurance (Group) after the insurer's Hong Kong initial public offering this month, according to the preliminary listing prospectus.
Ping An, China's second-largest insurer, aims at tapping up to HK$16.48 billion through the listing.
The listing document notes that HSBC is 'assumed' to be ready to buy shares worth HK$1.49 billion, leaving it with a 9.9 per cent equity stake, while other major shareholders will allow their holdings to be diluted during the IPO.
HSBC's insurance subsidiary now holds 10 per cent of Ping An, for which it paid US$600 million in November 2002. Goldman Sachs owns 6.87 per cent and an affiliate of Morgan Stanley holds 5.87 per cent. The largest existing shareholder is Shenzhen Investment Holding Corp, owned by the municipal government, which holds 12.49 per cent.
All existing shareholders have the right to subscribe to additional Ping An shares to maintain their stakes, which would otherwise be diluted by the new shares.
Both Goldman Sachs and Morgan Stanley, which invested in Ping An in the mid-1990s, have waived their right to buy more shares. As a result, their post-IPO holdings will be diluted to 5.47 per cent and 4.67 per cent, respectively. Similarly, Shenzhen Investment will allow its stake to be diluted to 8.77 per cent after the IPO, leaving HSBC's insurance subsidiary as the new largest shareholder.
