China Life Insurance Co, the country's largest life insurer, will buy 32 per cent of the shares of Guangdong-based China Southern Power Grid, becoming its second-largest shareholder.

The life insurer will buy assets worth 35 billion yuan (US$4.4 billion) from the State-asset management bureau under the Guangdong provincial government, which is the largest shareholder of China Southern Power Grid.

"The equity investment into Southern Power Grid provides us a good opportunity to boost our returns," said Yang Chao, chairman of China Life.

As planned, the Guangdong government would inject the money into Guangdong Development Bank (GDB) to increase its capital adequacy ratio and lower its non-performing loans.

Last month, an investment team led by Citigroup won a 24.3 billion yuan (US$3.07 billion) bid for control of GDB, and China Life got a 20 per cent stake of the bank.

"We are also in discussion with Huishang Bank (in East China's Anhui Province) for an equity investment," Yang disclosed, adding the insurer is now doing due diligence.

Meanwhile, China Life is also quite active in expanding investment into non-financial sectors this year. Besides getting 32 per cent of the shares of China Southern Power Grid, it is also bidding for 650 million shares in China Communications Construction Company, which will be listed on the Hong Kong bourse on December 15.

"Those moves should be financial investments instead of strategic ones, as part of China Life's efforts to find a better match between long-term liabilities and assets," said Hao Yansu, a professor with the Central University of Finance and Economics.

He believes infrastructure and utilities are perfect assets for life insurers because of their low volatility and long investment durations.

While expanding its investment portfolios, China Life has also quickened its steps towards listing on the Shanghai bourse. "We aim to list shares on the domestic market by the end of the year or in early 2007 to give investors a chance to share in our growth," Yang Chao said.

But a source close to the deal told China Daily the listing date could be as early as December 15 if everything goes smoothly.

China Life sent its application to the China Securities Regulatory Commission in October. It is still waiting for the go-ahead from the regulator.

"The ever increasing Shanghai benchmark index and the brisk turnover recently all sets the year-end as a perfect time for the listing," said an analyst with CITIC Securities.

China Life said earlier it planned to launch 1.5 billion A shares, accounting for 5.3 per cent of its total equity. China Life shares rose 0.52 per cent to HK$19.22 (US$2.5) yesterday. The stock has nearly tripled since the start of the year.

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