China Life Insurance has recently planned to buy shares worth $2.7 billion in affiliate China Guangfa Bank according to the media. This subscription will help the insurance giant maintain its position as the largest stakeholder in its affiliate. The bank is poised to raise funds by issuing stock to new investors.
While filing at the Hong Kong stock exchange, China Life stated that it would buy about two billion shares of the Guangdong-based lender at $1.38 a deal. This would prevent the dilution of the insurance company’s 43.7 percent stake in the bank. Thus, the company will be investing no more than $2.7 billion in the share replacement.
It further stated that the exact number amount of shares involved might vary as the supervision procedures governing the sale of state-owned assets are still pending. China Guangfa Bank plans to issue new shares that were announced separately in April and are conditional on the Ministry of Finance approval.
In the announcement, China Life said that the transaction would help deepen the strategic collaboration between the two entities and will boost the company’s overall competitiveness. The new shares are expected to be issued and traded on the Beijing Equity Exchange.
According to China Life’s 2020 annual report, it holds branches in 25 provinces and has about 360,000 corporate customers, 48 million individual customers, 51 million banking customers and 89 million credit card customers. Other stakeholders in the bank include Citic Trust, State Grid Yingda International Holdings and State Grid.