Ping An shareholders back fundraising plan
Updated: 2008-03-06 07:02
By Chen Hong(HK Edition)
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A glimpse of domestic insurance giant Ping An's headquarters in Shenzhen, Guangdong province. The insurance firm's massive refinancing plan has triggered heated debate. Chen Hong |
SHENZHEN: Ping An Insurance's 120-billion-yuan fundraising plan was suported yesterday by a massive 90 percent of the company's shareholders.
The support far exceeded expectations, not to mention the two-thirds minimum needed for approval.
A total of 78 percent of Ping An's A-shares and its Hong Kong-listed H-shares were accounted for in the vote, and over 90 percent of votes cast were in favor of the refinancing plan, the company said in a statement late yesterday.
The new plan would permit the mainland's second-biggest life insurer to issue no more than 1.2 billion new A-shares and 41.2-billion-yuan worth of convertible bonds to the domestic-capital market.
At 120 billion yuan, it would be the largest corporate fundraising measure ever taken in the mainland's domestic capital market, and it would be the world's sixth biggest.
But it is not yet clear when or in what form the offer will proceed. It still needs to be approved by the mainland's securities regulator, and that rubber stamp is by no means guaranteed after the regulator publicly warned companies last week not to damage the market by "maliciously seizing" money from it.
When asked yesterday whether the stock market has become a cash machine, Shang Fulin, chairman of China Security Regulatory Commission, reiterated that the watchdog would strictly censor the fundraising plans of A-share companies.
Ma Mingzhe, president and CEO of Ping An, said at a general shareholders meeting yesterday morning that the company will accelerate its investment by continuously expanding the capital base, but it will also take a prudent approach.
"The domestic financial industry grows very fast," Ma said. "We need and intend to accelerate our development, too. We raise funds for nine subsidiaries, and all the proceedings will be used in core business."
He noted that management would prudently consider the timing, size of the offering and market situation for the plan if it is approved.
However, some institutional investors still voiced their opposition to the plan.
Lion Fund, Ping An's largest fund shareholder, told the media that it voted against all the proposals regarding the new fundraising plan.
The fund representative said Ping An doesn't need to propose such a massive fundraising plan since its capital is adequate enough, adding that there is a lot of uncertainty surrounding the quality of the investment project after the fund raising, which will result in large operational risks to the company.
Some individual investors also questioned the management's decision to issue the new shares only to the domestic market, saying it isn't fair.
Wang Xiaogang, analyst with Oriental Securities Co, said Ping An's stock price will be put under pressure after the new fundraising plan is passed, but he added that he is still optimistic about the company's long-term prospects.
The stock price of Ping An tumbled from its October peak of 149.28 yuan to 67.1 yuan when the market closed Tuesday.
(HK Edition 03/06/2008 page3)