CMBC’s 18 billion RMB raised through issuance of new shares will enhance its core competitiveness

2007-8-13

Securities Daily  Zhang Shengnan

All of CMBC’s 18 billion RMB raised through issuance of new shares has come into the bank account by June 22. This time CMBC has issued 2.83 billion shares at the issuance price of 7.63 RMB per share, raising RMB 18.16 billion in total. With this, CMBC’s capital fund has been significantly increased and its core competitiveness further enhanced, laying a solid foundation for consistent development of its operation and management.

The subscription parties includes: Shanghai Goldpartner Biotec Co., Ltd (309,400,000 shares), New Hope Investment Co., Ltd (130,900,000 shares), China Fanhai Holding Group Limited (119,000,000 shares), Sichuan Southern Hope Industries Co., Ltd. (357,000,000 shares), China Life Insurance Company Limited (714,000,000 shares), Ping An Insurance Company Limited (714,000,000 shares), Ping An China（714,000,000 shares）, Everbright Securities Co., Ltd (35,700,000 shares).

CMBC’s this issuance of new shares lasted about one year. The plan was initially approved on the meeting of Board of Directors on July 15, 2006. The plan for issuance of new shares was approved through onsite voting and Internet voting on August 8 in the same year. On January 12, 2007, CSRC approved CMBC’s plan for issuance of new shares for no more than 3,500,000,000 shares through non public issuance. On February 6, the Board of Directors of CMBC determined the planned quota, the issuance price and the target subscribers. The quoting process for the issuance ended on February 15. Because CMBC’s plan to convert capital reserve to increased stock, i.e. every 10 shares will get 1.9 bonus shares, was implemented on June 11, 2007, the price and scale of the non public issued shares will be subject to ex-right processing. The ex-right issuance scale is 2.38 billion shares and the ex-right price is 7.63 RMB per share (the price determined in quoting and registering is 9.08 RMB per share). The total sum remains unchanged.

According to CMBC’s announcement, all the fund raised this time will be added to the company’s core capital to improve the capital adequacy ratio. After this issuance, CMBC’s net asset per share will be increased considerably. The net asset gain will be lowered for a short period of time. However, with the expansion of capital, the business scale and market share will keep increasing and, from a long-term point of view, this will have a positive influence over the improvement of CMBC’s profit-making capacity.

From the perspective of corporate governance, there is a change in the list of the top ten shareholders, two listed large-scale insurance companies, China Life and Ping An Insurance, entered the top ten shareholders’ list. This will be beneficial for the company in further improving its corporate governance structure and business extension.

【Close this window】