Ping An Insurance (Group) Co. is contemplating a convertible bond sale this year, sources familiar with the matter revealed. This move mirrors recent actions by leading Chinese tech firms like Alibaba Group Holding Ltd.
Sources disclosed that Ping An is in preliminary discussions with investment banks to prepare for a potential bond issuance, ranging from $2 billion to $5 billion. The sources, requesting anonymity due to the sensitivity of the matter, cautioned that the plans are in early stages and could be subject to change.
According to the sources, any such move would necessitate regulatory approval from Chinese authorities.
Responding to queries following a Bloomberg News report on the prospective bond sale, Ping An issued a statement on Wednesday asserting its ability to issue debt financing instruments over the next three years, subject to prior shareholder approval.
“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,” Ping An stated.
Convertible bonds have emerged as a preferred fundraising tool for Chinese corporations, offering more favorable rates compared to conventional debt instruments. This trend has been particularly pronounced in the technology sector, exemplified by Alibaba’s record-setting $5 billion convertible bond issuance in May.
Other notable issuances include JD.com Inc.’s $2 billion convertible bond sale and Lenovo Group Ltd.’s planned issuance of zero-coupon convertible bonds to a unit of Saudi Arabia’s sovereign wealth fund.
Should Ping An proceed with the bond sale, the proceeds would be directed towards general financing purposes, sources added.
The insurer has been navigating challenges such as market declines and reduced bond yields affecting investment returns. Ping An’s Hong Kong-listed shares had declined by 29% over the past year as of Tuesday, though they saw a 2.8% increase early Wednesday.
Last week, Ping An announced its intention to increase its stake in online financial services firm Lufax Holding Ltd. to approximately 56.8% following a special dividend.
