Shareholders give nod to Ping An's share plan - ResearchInChina
Date:2008-03-06
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SHAREHOLDERS approved Ping An Insurance (Group) Co's (stock code: 601318) behemoth funding plan despite criticism that the plan has caused the market value of the insurer to evaporate by 30 percent.
The majority of shareholders gave the green light to Ping An to sell up to 1.2 billion new yuan-backed A shares, or 14 percent of its expanded capital, plus 41.2 billion yuan (US$5.7 billion) of six-year convertible bonds with detachable warrants.
Ping An needed the go-ahead from at least two-thirds of its shareholders to carry out the plan.
"The company needs to quicken its development in a fast changing financial market in China. The funding plan is for the nine subsidiaries under the group," said Ma Mingzhe, chairman of Ping An.
Ma said the insurer's senior management will buy shares in the follow-on offering if the secondary offering plan is approved.
Ma and his team also had to put up with unhappy shareholders who criticized the management for the plan's lack of details over the use of the proceeds. Analysts had expected the insurer to buy stakes in overseas financial players hit by the subprime crisis in the United States as their valuation has taken a beating.
The funding plan has become a hot issue that some business Websites like www.hexun.com even posted the shareholders' meeting online in a rare move.
With the plan's approval, analysts expect Ping An's shares to dive further in the short term. Yuan-backed A shares of Shenzhen-based Ping An have lost 28 percent since it announced the fund raising plan in January.
But industry experts said the plan can help the country's second-biggest insurer chalk up about 120 billion yuan based on current market prices. The plan's size has already shrunk by almost a third due to the erosion in the insurer's market value.
Ping An suspended trading of its A shares yesterday for the meeting.
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