Dec 13, 2013 05:37 PM

Anbang Raises Stake in Merchants Bank

(Beijing) – A Shenzhen-based insurance company has been brought into the spotlight after making a record-setting purchase of China Merchants Bank (CMB)'s shares in a block trade this week.

The insurance company, Anbang Property & Casualty Insurance Co., is not publicly traded. Its latest available financial statement shows its total assets under 90 billion yuan as of December 31, 2012.

That means it needs to have increased the figure by 50 percent to 134.6 billion yuan this year. Otherwise, the acquisition may violate the insurance regulator's requirement that caps insurance companies' investment into stocks and stock-focused investment funds to 20 percent of their total assets.

Anbang Property now holds more than 5 percent of CMB. As of the end of September, it also owns 4.89 percent of China Minsheng Bank and at least 5 percent of property developer Gemdale Corp. Its holdings in the three companies are expected to be around 27 billion yuan, based on those stocks' prices as of December 11.

Anbang Property acquired 1.13 billion of CMB's shares for 13.68 billion yuan on December 9, raising its stake in the bank to 1.26 billion shares. This is the highest-valued block trade ever in the A-share market.

It paid a price of 12.7 yuan per share, which represented a 10.73-percent premium on the share's closing price that day. 

The deal made the insurer the bank's third-largest owner of shares in circulation. The bank announced the transaction in a statement it filed with the Shanghai Stock Exchange. It did not disclose the seller (or sellers).

Anbang Property was founded in September 2004 by seven companies including SAIC Motor and Sinopec. Since its establishment it has received premiums worth about 47 billion yuan.

Its parent company Anbang Insurance Group owns a bank and another six insurance-related companies with combined assets exceeding 500 billion yuan.

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