China Life Heads For December IPO
China Life, the country's largest life insurance company,
has set the dates for the largest IPO of 2003. The company
plans to launch a US$2.5 billion flotation on Dec. 17
in New York, to be followed by an offering in Hong Kong
on the following day. The company's roadshow is set to
start on Dec. 1. It filed its prospectus with the US Securities
and Exchange Commission last week.
China Life controls 45 percent of the country's life
insurance company. Market penetration for life insurance
is comparatively low in China, but is expected to grow
rapidly in the coming 10 years as the country develops.
China Life has said that it plans to use a portion of
the proceeds to strengthen the company's capital base.
So far, for 2003, three of the largest IPOs have been
from Chinese companies. They have been China Yangtze Power
(US$999 million) and PICC (US$802 million). China's second
largest insurer, Ping An, has about half of China Life's
market share, and is planning a US$2 billion listing.
Unlike China Life, Ping An is a privately owned company.
China Life is expected to command a premium because it
is expected to become one of the country's blue chips.
The general growth of the Chinese economy has translated
into premium valuations for Chinese companies, regardless
of whether they are restructured state-owned enterprises,
or new private companies.
Looking at 2004, the pickup in the US economy, and renewed
interest in technology, driven by the Google IPO, will
drive interest in Chinese companies. It would be safe
to assume that there will be a significant number of Chinese
companies in the IPO pipeline in the coming year.
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