Ping An Insurance Said to Be Considering Convertible Bond Sale This Year

The Ping An International Financial Center in Beijing. Bloomberg (Bloomberg)

(Bloomberg) -- Ping An Insurance (Group) Co. is considering a convertible bond sale this year, according to people familiar with the matter, following in the footsteps of Chinese technology companies including Alibaba Group Holding Ltd. 

Ping An is in preliminary talks with investment banks to lay the groundwork for a sale that could range from $2 billion to as much as $5 billion, the people said, asking not to be identified because the matter is private. Considerations are at an early stage and Ping An could decide not to proceed with a sale, they said.

The insurer would need Chinese regulatory approval to proceed with a convertible bond sale, the people said. 

Ping An issued a statement Wednesday following the Bloomberg News report on the potential bond issue, saying it can issue debt financing instruments in one or several tranches from time to time in the next three years. 

“The company will decide on any financing within the scope of the authorization granted at the annual general meeting in accordance with the principle of maximizing shareholders’ interests and based on business development and capital plan,” it said.  

Chinese firms have been turning to convertible bonds to raise funds at cheaper rates than traditional debt. They’ve been particularly popular in the tech sector — Alibaba sold a $5 billion convertible bond in May, a record dollar-denominated sale by an Asian company. Inc. also sold a $2 billion convertible bond in May, a figure matched by Lenovo Group Ltd., which plans to sell zero-coupon convertible bonds to a unit of Saudi Arabia’s sovereign wealth fund. 

Ping An will use the proceeds to help with financing purposes if it proceeds with a sale, the people said. 

The company, which has been hit by stock-market declines and lower bond yields eroding investment returns, has been looking at cutting its 8% stake in HSBC Holdings Plc. Ping An’s shares had fallen 29% in Hong Kong over the past 12 months through Tuesday. They rose 2.8% early Wednesday. 

Ping An said last week that its stake in online financial services company Lufax Holding Ltd. will rise to about 56.8% following a special dividend. 

(Adds statement from Ping An in fourth and fifth paragraphs, and updates move in share price in penultimate paragraph.)

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