Posted on Sep 16, 2010 by Sergio Ulloa
Ping An Insurance (Group) Co. Ltd., listed on the Hong Kong Stock Exchange, has recently announced that its board of directors has approved the plan to merge Ping An Bank Co. with the Shenzhen Development Bank Co.
Through a private placement, Ping An group will buy 1.639 billion new shares issued by Shenzhen Development Bank worth US$4.3 billion (EUR 3.3 billion), equivalent to 32 percent of the bank's enlarged capital. To finance this deal, Ping An group will use US$398 million (EUR 306 million) in cash, plus its entire 91 percent stake in Ping An Bank.
Earlier this year, Ping An group had obtained approval from the Chinese authorities to acquire a stake in Shenzhen Development Bank
. Once the private placement has been completed, the stake of Ping An group in the Shenzhen Development Bank will increase from 30 percent to 52 percent.
The immediate hurdles to clear ahead, consist of getting the corresponding approvals from the Chinese banking, insurance and securities regulators, plus the motions of approval by shareholders of both Ping An group and Shenzhen Development Bank.
For some time in the past recent years, Ping An group, which is the second-largest insurer in the world by market value, had been looking at ways to gain control of a Chinese bank with a national network, especially after it lost a bid for Guangdong Development Bank Co. back in 2006 to a consortium formed by participants that included China Life Insurance Co. and Citigroup Inc.
Ping An Insurance (Group) Company of China, Ltd. (Ping An) is engaged in providing a range of financial products and services. The Company focuses on three businesses: insurance, banking and investment. The Company operates in five business segments: life insurance business, property and casualty insurance business, banking business, securities business, corporate and other businesses. The Company's subsidiaries include Ping An Life Insurance Company of China, Ltd. (Ping An Life), Ping An Property & Casualty Insurance Company of China, Ltd. (Ping An Property & Casualty), China Ping An Trust & Investment Co., Ltd. (Ping An Trust), Ping An Securities Company, Ltd. (Ping An Securities), Ping An Bank Co., Ltd. (Ping An Bank), Ping An Annuity Insurance Company of China, Ltd. (Ping An Annuity) and Ping An Health Insurance Company of China, Ltd. (Ping An Health), among others.
China Life Insurance Co.
China Life Insurance (Group) Company and its subsidiaries constitute the largest commercial insurance group in Mainland China. It is the only domestic insurance group with an asset exceeding 1 trillion RMB yuan. It is also one of the largest institutional investors in China's capital market.
Shenzhen Development Bank
Shenzhen Development Bank Company Limited (SDB) is the first commercial bank in the People's Republic of China that launched IPO and got listed in the Shenzhen Stock Exchange, with its IPO launched on May 10, 1987, taking the form of free subscription of RMB-denominated ordinary shares and was established on December 28, 1987. After 20 years of rapid development, SDB has gradually boosted its comprehensive strength and expanded increasingly, with 266 branches in 18 major economic cities, namely Beijing, Shanghai, Tianjin, Chongqing, Guangzhou, Shenzhen, Hangzhou, Nanjing, Jinan, Dalian, Qingdao, Chengdu, Kunming, Haikou, Zhuhai, Foshan, Ningbo and Wenzhou, with representative offices in Hong Kong and Beijing, and with more than 600 banks as correspondent banks in over 70 countries and regions abroad.