An undisclosed shareholder raised $280.4 million in a secondary share sale of New China Life Insurance on Tuesday night after offloading shares towards the bottom of the indicative price range.
The share sale follows a run-up in the mainland insurance company's shares as investors are keen to cash in on the gains in Chinese companies listed in Hong Kong.
UBS launched the 34.6 million-share offering Tuesday at an indicative price range between HK$49.60 to HK$50.35 per unit, representing a 3.5% to 2% discount to the May 19 closing price of HK$51.40, according to a term sheet seen by FinanceAsia. Shares were sold in board lots of 100, the term sheet said.
Shares priced at HK$49.85 per unit, allowing the seller to raise $280.4 million from the secondary sell-down. Books were multiple times covered, although allocations were still being sorted late Tuesday night in Hong Kong.
Shares in New China Life are up 31.3% year-to-date, with most of the gains coming since the end of March. Shares jumped 28.2% from March 27 up to May 19. They have been on a downward slide since May 11, however, retreating 3.6% up to May 19.
The recent slide has left investors and bankers questioning whether the bull-run has legs. Most believe that there is still room to run, although many expect volatility.
The undisclosed institutional investor is the latest to take advantage of the run up in Hong Kong-listed Chinese companies.
On April 13, Singaporean life insurer Great Eastern Holdings raised $555 million after selling 85 million shares in New China Life. Great Eastern became the latest international insurer to pare down holdings in Chinese insurers, as very low margin bancassurance channels have prompted investors to reassess their ventures in China.
Before the secondary sale, Great Eastern owned 103 million shares in New China Life; post-divestiture, it holds 18 million units. Great Eastern was one of the cornerstone investors in New China Life's $1.9 billion initial public offering in December 2011. Four cornerstone investors pledged $780 million in the IPO of China's third largest life insurer.
However, a number of foreign investors have been shedding stakes in mainland insurers over the past few years due to unfavourable regulatory conditions. China heavily restricts the percentage foreigners can own in domestic insurers, and has also been regulating product approvals, as well as the pace at which insurers expand across the country. In addition, Chinese domestic insurers are competing with wealth management companies, which often offer higher-yielding products.
Zurich Insurance Group first invested in New China Life in 2000. It sold $1.9 billion during the company's dual listing in Hong Kong and Shanghai in December 2011, and in 2013, sold its entire stake.
Other blocks
In Hong Kong on May 19, Deutsche Post Beteiligungen Holding sought to raise $140 million by selling some of its stake in shipping and logistics company Sinotrans.
The 191.4 million-secondary share sale was offered at a price range between HK$5.62 to HK$5.80 per unit, representing a 5.1% to 8% discount to the May 19 close of HK$6.11 per share.
