China Pacific Insurance (Group) Co, the country's third largest life insurer, is expected to go public in Shanghai in November, said sources.

 

The Shanghai-based company, also the country's second largest property insurer, is expected to issue 1 billion to 1.5 billion A shares and raise 15-20 billion yuan, sources said.

 

The indicative price for the initial public offering (IPO) might hover around 20 yuan per share.

 

The insurer may float shares on the Hong Kong stock exchange by the end of this year if its Shanghai IPO is successfully completed by the end of November.

 

The total new shares to be issued in Shanghai and Hong Kong will not exceed 2.5 billion, which will probably account for no more than 27.2 percent of its enlarged share capital.

 

It has filed an application to the China Securities Regulatory Commission (CSRC), the country's securities watchdog. The insurer has hired Bank of China International Securities, JPMorgan and UBS AG to manage its share sale in Shanghai and Hong Kong.

 

According to China Insurance Regulatory Commission data, China Pacific Insurance's profit hit 1.13 billion yuan in 2006, with net assets rising to 7.42 billion yuan.

 

Companies are required to record profit for at least three consecutive years before they can apply for a listing.

 

The insurer was in the red in 2004 but turned around in 2005 and 2006, and is expected to report a solid performance for 2007. Its 97.83-percent-owned life insurance arm Pacific Life reported a 3 billion yuan net profit in the first half of 2007.

 

The sources said China Pacific Group was lobbying the CSRC for special permission for its Shanghai listing after handing over its application.

 

The company began preparing for listing three years ago, but its Hong Kong listing was postponed at least twice due mainly to internal differences.

 

In April, US private equity firm Carlyle Group and US insurer Prudential Financial transferred their holdings in Pacific Life to its parent company China Pacific Insurance (Group), paving the way for the group's listings.

 

Carlyle and Prudential Financial bought a 25 percent stake in Pacific Life for $400 million in 2005.

 

Prudential and Carlyle now hold a 15.70 percent and 4.2 percent stake respectively in China Pacific Insurance Group.

 

Ernst & Young, auditor for the insurer's IPO, is expected to finalize its 2006 financial report soon and submit it to regulators for their reference in deciding whether to approve the Shanghai listing.

 

(China Daily October 19, 2007)