China Life Insurance to buy US$2.7 billion of shares in affiliate Guangfa Bank
- China Life Insurance says it plans to buy US$2.7 billion worth of shares in affiliate Guangfa Bank to upkeep with its 43.7 per cent stake
- The deal will deepen the strategic collaboration between the two and will ‘enhance the company’s overall competitiveness’, China Life said in an announcement
China Life Insurance said it would subscribe to 17.5 billion yuan (US$2.7 billion) of China Guangfa Bank’s shares to maintain its position as the largest stakeholder in its affilitate, as the Guangdong-based lender is poised to raise funds by issuing stock to new investors.
China Life will buy about 2 billion shares of China Guangfa Bank at about 8.81 yuan each, a deal which would prevent its 43.7 per cent stake in the bank from being diluted. In total, China Life will invest no more than 17.5 billion yuan in the share placement, it said in a filing to the Hong Kong stock exchange.
The exact amount and number of shares involved are still subject to change, China Life said, as they are still pending supervision procedures governing the sale of state-owned assets. State-owned China Guangfa Bank’s plan to issue new shares, which was announced separately last month, is conditional on Ministry of Finance approval.
The insurance giant’s announcement followed China Guangfa Bank’s disclosure in April that its board of directors had approved a plan to issue new shares valued at not more than 40 billion yuan. The new shares will be issued and traded on the Beijing Equity Exchange.
