China Life Insurance Co. and Ping An Insurance (Group) Co., the nation's two largest insurers, paid a combined 10.8 billion yuan (US$1.4 billion) for about 10% of China Minsheng Banking Corp., Bloomberg reported.
The report said China Life and Ping An each paid 5.4 billion yuan for 600 million shares, Minsheng Bank said in a statement today. The Beijing-based lender raised 18.16 billion yuan selling 2 billion shares to seven corporate investors.
``China's insurance companies have too much money and they have a relatively long investment horizon, so the banking sector presents the best opportunity,'' said Forbes, quoted Olive Xia, a Shanghai-based analyst at Core Pacific-Yamaichi International, as saying. Buying into Minsheng Bank also enables China Life and Ping An to expand their distribution networks, she said.
Cao Qingyang, a spokesman for China Life, said Minsheng is already helping the insurer sell policies, adding that volumes so far have been ``relatively small.'' Ping An spokesman Sheng Ruisheng called the Minsheng stake a ``pure financial investment'' and said the companies currently have no plans for further cooperation.
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