China Life (Overseas) Buys Stake in Biopharmaceutical Company

China Life Insurance (Group) Co. [52446] has entered into agreements with Hong Kong-listed Sino Biopharmaceutical Ltd. to acquire a 4.18% equity stake in the latter through its wholly owned subsidiary, China Life Insurance (Overseas), for HK$420 million (US$54 million).

China Life (Overseas), an affiliate of the Beijing-based China Life Insurance Co. Ltd. [77626], could not be reached for further comment.

The transaction is the second investment in 2010 that is related to China Life. The insurer acquired 423 million shares of another Hong Kong-listed company, Sino-Ocean Land, one of the largest Chinese real estate developers in Beijing and the pan-Bohai rim, from Sinochem International Corp. That deal made China Life the largest shareholder of Sino-Ocean, with a 24.08% stake (BestWire, Jan. 18, 2010).

Although both China Life and China Life (Overseas) are connected companies, they operate separately. A spokesman for China Life declined to comment on the transaction.

Asked if investments in real-estate projects will become the main investment strategy for China Life in 2010, the spokesman said it depends on official approval of the China Insurance Regulatory Commission, and whether a property investment portfolio is "beneficial" to the company's development and if the company can get the right price.

In 2009, China Life recorded unaudited accumulated premium income of 295 billion yuan (US$43 billion), according to the CIRC.

New Transaction

According to a statement of Sino Biopharmaceutical filed with the Hong Kong Stock Exchange, China Life (Overseas) and Sino Biopharmaceutical will make the transaction through top-up placing of existing shares of the biopharmaceutical company and subscription of new shares.

Under the agreements, China Life (Overseas) agreed to purchase 200 million shares of Remarkable Industries Ltd., a wholly owned company from Tse Ping, a director and a controlling shareholder of Sino Biopharmaceutical, with the placing price of HK$2.10 per share; representing a discount of about 6.25% to the closing price of HK$2.24 per share on Jan. 22, the last trading day before the suspension of the company’s stock trading.

The subscription price is HK$2.10 per share. Completion of the subscriptions is subject to the conditions agreed by both parties.

China Life Insurance (Overseas), which has operated in Hong Kong for 25 years, is the first and the largest state-owned life insurer that operates in Hong Kong and Macau. Its three main businesses include insurance, investments and provident fund services. According to the insurer, its current asset value exceeds HK$26 billion.

Sino Biopharmaceutical produces medicines in two core therapeutic categories: cardio-cerebral diseases and hepatitis. Its development also extends to oncology, analgesic and respiratory medicines. The company listed on the stock exchange in Hong Kong in December 2003.

(By Rebecca Ng, Hong Kong news editor: [email protected])