Ping An Insurance (Group) Co, the country's second largest
insurer, won't change its refinancing plan after it triggered a
sharp market fall and spurred a new round of share sales by other
listed companies, sources said.
"Ping An teams, led by the company's top management, have just
finished a roadshow in Beijing, Shanghai and Shenzhen. They
outlined strategic planning and the use of capital raised from the
share sale to fund management companies," Wang Xiaogang, an analyst
with Shanghai-based Orient Securities, said yesterday.
On Jan 21, Ping An announced pricing details for its plan to
sell 1.2 billion Ashares and 41.2 billion yuan of convertible bonds
- the largest equity refinancing bid in China's capital market.
The insurer said it would use funds raised to invest in mergers
and acquisitions compatible with its core businesses.
"Ping An didn't change the scale of the refinancing plan, though
their mega share sale triggered dispute and weighed heavily on the
weakened capital market. But they may choose to issue convertible
bonds first and new shares later," Wang said.
Ping An's proposed share and bond sale must still be approved by
regulators and a two-thirds majority of shareholders at a meeting
scheduled for March 5.
A further 23 listed companies have launched refinancing plans
since Jan 21 to raise a total of 204.3 billion yuan, according to
financial information provider Wind Info.
Of the companies, 16 plan to issue additional shares to raise
155.73 billion yuan. Large-scale share issues apart from Ping An's
include Merchants Real Estate's plan to raise 8 billion yuan and ST
Taige Bio-Tech Corp's plan for 6.3 billion yuan.
"Given the current conservative market sentiment, listed
companies should think twice when working on their refinancing
plans," said Dong Chen, a senior analyst with CITIC China
Securities. "Convertible bonds and small-scale additional shares
are better choices (for the issues)."
The benchmark Shanghai Composite Index sank 97.27 points, or
2.09 percent, on Wednesday, on news of Pudong Development Bank's 40
billion yuan share issue plan. The index lost a further 39.85
points, or 0.87 percent, yesterday to close at 4527.
Although there were large-scale share issues last year - such as
CITIC Securities' 26.2 billion yuan plan in August - they were good
news for investors at a time when the market was bullish and full
of optimism, Dong said. But when the market is flat and cautious,
investors tend to react negatively to news that may divert large
chunks of capital from the market, he said.
(China Daily February 22, 2008)
