Ping An Insurance has 'no need to raise funds for SDB stake'
Updated: 2009-06-20 07:14
(HK Edition)
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HONG KONG: Ping An Insurance will fund its planned purchase of a stake in Shenzhen Development Bank (SDB) from internal resources and has no near-term fund-raising plans, the official China Securities Journal said Friday, quoting Ping An's president.
Ping An said last week it would buy Newbridge Capital's stake in the mid-sized Shenzhen bank for 11.45 billion yuan ($1.68 billion) in cash or via a share swap and would pay up to 10.7 billion yuan for up to 585 million shares in the bank in a private share placement, leaving it with a stake of as much as 30 per cent.
"The company's internal resources are sufficient to fund the purchase. Ping An's capital adequacy ratio and pay-out ability can still meet regulatory requirements after the deal," the paper quoted Ping An president Louis Cheung as saying.
"We currently have no fund-raising plans," Cheung said.
Ping An is paying a "fair price" for its controlling stake in SDB, according to the president.
"The market consensus is that it's expensive," said Danny Yan, a portfolio manager at Taifook Asset Management Ltd. "To me this premium is acceptable. Ping An has only minimum exposure to banking and it must pay a premium to get an exposure."
The mainland's second-largest insurer agreed June 12 to pay $3.2 billion to boost its stake in SDB to almost 30 percent from 4.68 percent, gaining 300 bank branches in 18 cities as it aims to earn two-thirds of revenue from non-insurance services.
Ping An shares dropped 5.1 percent, the biggest decline in seven weeks, to close at HK$54.25 in Hong Kong.
Reuters - China Daily
(HK Edition 06/20/2009 page5)