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Insurance funds get first quota for infrastructure construction |
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Written by Administrator
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Wednesday, 19 July 2006 |
BEIJING, July 19 (InfoChina) – Insurance funds have got the green light from the State Council to invest in infrastructure construction, with an approved quota of 12 billion yuan for the trial operating period, Xinhua-run Shanghai Securities News quoted Sun Jianyi, vice CEO of one of China’s leading insurers Ping An of China (HK: 2318), as saying.
Of the total quota, Ping An, leader of the whole project, will take 10 billion yuan, and the rest 2 billion yuan will be shared by China Life Insurance (NYSE: LFC, HK: 2628), PICC (HK: 2328) and Taikang Life Insurance, Sun disclosed. He added that the investment quota is likely to be enlarged if the trail operation is effective.
Different from an earlier market guess that insurance funds can only invest in one project, the investment may embrace a basket of projects covering highways and public utilities, such as water, power grids and estate. And insurance companies will get operating rights from the projects instead of participating in the real construction.
An authoritative source of China Insurance Regulatory Commission (CIRC) disclosed that the available projects for insurance funds include 2010 Shanghai World Exposition, highways, Shanghai subways and airports.
At present, return on highway investment in China may reach 8-10% a year, and the required investment term is more than 30 years, which just cater to the partiality of insurance funds, said an insider.
For means of investment, the Measures on Insurance Funds Investing in Infrastructure Construction, promulgated by CIRC in March this year, prescribed that the investment should be done by trust, and the entrusted entity may be trust & investment companies, insurance asset management companies, industrial investment fund management companies or other professional management institutions.
Reasons for choosing Ping An as the leader are: firstly, Ping An has spent more than three years studying investing in infrastructure construction and strived for a breakthrough by repeated negotiations with the government; second, Ping An carried out a series of experiments in infrastructure construction based on its own trust subsidiary, but the other three did not; moreover, the board chairman of the company made great efforts in putting the project into practice.
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China Stock News