China Pacific to raise up to $3.34 bln in IPO

HONG KONG, Dec 6 - China Pacific Insurance (Group) Co Ltd, the country's third-largest life insurer, plans to raise up to HK$25.9 billion ($3.34 billion) from a Hong Kong initial public offering, a source close to the deal said on Sunday.

Shanghai-listed China Pacific part-owned by U.S. private equity firm Carlyle Group, is selling 939.6 million shares, of which 861.3 million are new shares and the rest are existing shares, at a price range indicated between HK$26.8 and HK$30.1 per share, the source said.

The source is directly involved in the deal, which would be the sixth-largest IPO of the year, but not authorized to speak about the transaction. At the offering price range, China Pacific Insurance is valued at 1.7 times to 1.9 times 2010 embedded value estimated by bookrunners, the source said.

In comparison, China Life China's No.1 life insurer, traded at about 2.87 times forecast 2010 embedded value, while No.2 life insurer Ping An traded at 3.71 times forecast 2010 embedded value, according to a UBS research report.

China Pacific Insurance's shares ended Friday in Shanghai at 27.12 yuan ($3.97), up 10 percent. Its shares have gained 144 percent this year, outperforming Shanghai Composite Index's .SSEC 82 percent rise.

UBS estimated China Pacific Insurance's 2009 earnings would jump about 125 percent to 7 billion yuan.

China Pacific Insurance, which will kick off a formal marketing roadshow on Monday, is set for its trading debut on Dec. 23. China International Capital Corp (CICC), Credit SuisseGoldman Sachs and UBS are handling the deal.

China Pacific Insurance's failed to float its shares in Hong Kong last year, when capital markets plunged in the global financial crisis.

The company is taking advantage of a stock market revival this year to raise money and compete more aggressively with bigger rivals Ping An Insurance (Group) Co and China Life Insurance Co .

China's life insurance market has seen an increase in penetration in recent years, thanks to Beijing's focus on health care and the rapid economic growth in the world's third-biggest economy. (US$1=HK$7.75) (Editing by Don Durfee and Karen Foster)