PING AN FLOTATION IN DOUBT AFTER OFFICIAL PAPER CRITICISES MOVE

China-based assurer Ping An’s plan to raise about CNY140bn ($19.5bn) through the issue of up to 1.2bn domestic shares and CNY41.2bn-worth of convertible bonds looked in serious doubt today after official state publication People’s Daily published a commentary that criticised the move. A commentary titled “Reflections on Ping An’s huge fund-raising — more regulatory efforts needed” noted that the announcement had coincided with a steep fall in the stock valuations, and that investors were concerned at such a large share issue. It added that “if the fund-raising plan was so big and the purpose wasn’t clarified, and the investment returns weren’t clear, and it just asked the investors to stump up the cash, it’s no wonder that investors were unhappy”. Although the commentary did not have the status of an official editorial, such pieces in official papers are assumed to carry the approval of the authorities. Ping An’s share price rose by more than 6% today as fund managers assumed that any cash-raising plan by Ping An would either be abandoned or scaled back severely. The commentary also coincided with a series of announcements by authorities that bore all the hallmarks of a concerted effort to stop the recent severe falls in the value of Chinese stocks. When making its initial announcement, Ping An had said that it would use the money raised as capital and to invest in mergers and acquisitions compatible with its core business, although suspicions remained among fund managers that the company was looking to raise funds on the back of frothy valuations in the Chinese stockmarket. A minority shareholders’ meeting is scheduled for March 5 to vote on the fund-raising plan.