Chinese insurer PICC planning $783M rights issue

HONG KONG (Reuters)—China's largest property insurer, PICC Property & Casualty Co. Ltd., on Tuesday said it planned to raise about 5 billion yuan ($786.5 million) via a rights issue to strengthen its capital base and improve its solvency margin.

In a filing to the Hong Kong bourse, PICC said it proposed an issue of 345.6 million H shares in the proportion of one rights share for every 10 existing H shares held at $5.50 Hong Kong (71 cents) each, representing a discount of 47.1% to the previous close. The H share rights issue will raise about $1.9 billion Hong Kong ($243.8 million).

The plan is conditional upon approval from relevant authorities, including the China Insurance Regulatory Commission and the China Securities Regulatory Commission, it said.

American International Group Inc., which owns about 31.9% of PICC's issued H shares, will subscribe to the portion of rights shares allotted to it, PICC said.

PICC also proposed an issue of 768.6 million domestic rights shares on the basis of one domestic rights share for every 10 existing domestic shares held at 4.49 yuan (71 cents) each, raising about 3.5 billion yuan ($550.6 million).

China International Capital Corp. Hong Kong Securities Ltd. (CICC) is the sole global coordinator of the issue. CICC, HSBC and Goldman Sachs are joint lead underwriters and bookrunners.

PICC had said earlier that it would maintain a relatively low combined cost ratio in the second half of this year.

Shares of PICC have fallen 7.6% so far this year, compared with a 21.7% drop in the broader market.