Ping An shareholders back insurer’s offering plan
SHANGHAI: Shareholders in Ping An Insurance voted Wednesday to approve an offer of new shares and convertible bonds that could bring in about $17 billion in one of the worlds biggest corporate actions to raise new funds.
The controversial proposal, which has caused Ping Ans shares to fall and fueled a slide in Chinas entire stock market, was passed by more than two-thirds of shareholders in the growing southern town of Shenzhen, said official Chinese media and a person with direct knowledge of the vote.
The deal would give one of the largest Chinese life insurers money for possible acquisitions. Ping An has said it wants to expand overseas.
It is unclear how the issue could go ahead. Ping An could face a struggle with Chinas securities regulator, which must rule on any share issue. Last week, the regulator publicly warned companies against hurting the market by “maliciously seizing” money from it.
Ping Ans planned issue of up to 1.2 billion domestic A shares, or 16 percent of its current share capital, plus convertible bonds with warrants, could raise some $17 billion at the latest market price of its local currency A shares. That would make it the largest corporate fund-raiser by far in Chinas domestic securities markets, and the worlds sixth-biggest fund-raiser.
“I am confident that we can transform China Ping An into a global Ping An,” the chairman, Ma Mingzhe, said, according to local news reports, as he fielded questions from angry shareholders who would see the value of their shares diluted by the offering.
One woman asked: “I would like the chairman to explain - why are you doing this? What are you going to use the money for? Do you know how tough it is, to see a 140 yuan stock drop to todays levels?”
Ping Ans A shares have slid to 67.10 yuan, or $9.44, from 98.21 yuan in mid-January, just before the fund-raising plan was announced, and a record peak of nearly 150 yuan last October.
Ma said Ping An needed the cash to keep pace with the boom in Chinas financial industry, and that any large financial firm needed to take opportunities when they arose.
The controversy over Ping Ans plan relates partly to the fact that it has declined to give details of its investment plans or the details of the offer, beyond saying it wants to increase its capital and invest at home and abroad.
A strenuous lobbying campaign by Ping An among big investors, many of which are corporations based in its hometown of Shenzhen, appeared to ensure a comfortable passage of the proposal. The global banking giant HSBC, which owns 17 percent of the company, said it supported the plan.
The benchmark Shanghai stock index, which is 30 percent below a high in October, has dropped since Ping An announced its plan, partly because investors fear the offer could encourage other big companies to propose similar offerings.
The China Securities Regulatory Commission has been scrambling in recent weeks to prop up the market, so many analysts think it is likely to delay or force at least a moderate reduction of the offering.
“Were going to scrutinize very rigorously Ping Ans proposal in accordance with all the relevant rules on secondary capital raisings,” the commissions vice chairman, Fan Fuchun, said.
Ping An executives told shareholders they wanted to diversify the companys assets, into euro-denominated holdings, for example.
