PING An Insurance (Group) Co will buy a strategic stake in traditional Chinese medicine maker Yunnan Baiyao Group through a private placement, the drug maker said yesterday.

Ping An will take up to a 10 percent stake in Yunnan Baiyao, the TCM firm said in a statement to the Shenzhen Stock Exchange. The financial terms were not disclosed.

Ping An is seeking to grow into a diversified financial group that will generate two-thirds of its revenue from banking, securities and asset management services.

The bearish stock market this year has curbed the investment returns of insurers like Ping An. The benchmark Shanghai Composite Index lost 46 percent in the first half, pushing insurers to seek earnings alternatives.

Ping An and its peers are also under competitive pressure from banks.

The Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications and Bank of Beijing have applied to invest in insurers.

Yunnan Baiyao, based in the southern city of Kunming, Yunnan Province, specializes in making a powder used in traditional Chinese medicine to treat bleeding and bruises, and to improve blood circulation.

The pharmaceutical company has been suspended from trading since July 29. It will resume trading on Monday after the deal is finalized, it said in the statement.

Ping An shares ended at 44.19 yuan (US$6.44) in Shanghai yesterday, up 0.64 percent, while the Shanghai Composite Index decreased 1.86 percent to 2,690.75.