Bank of Hangzhou (600926.SH) disclosed on July 15 that shareholder China Life Insurance Company Limited ("China Life Insurance") intends to divest all its 50.7894 million shares in the bank. This marks China Life's fourth divestment announcement since becoming a pre-IPO strategic investor in 2009, having initially invested approximately RMB 1.635 billion through multiple capital injections before the bank's 2016 A-share listing.
Notably, China Life has progressively reduced its stake through three previous transactions: - 2021: Sold 55.8943 million shares at RMB 14.6-15.6 per share (RMB 843 million proceeds) - 2023: Divested 119 million shares at RMB 12.05 per share (RMB 1.429 billion proceeds) - 2024: Reduced holdings by 59.3028 million shares at RMB 11.84-14.42 per share (RMB 770 million proceeds)
Cumulative divestment proceeds reached RMB 3.042 billion before this final disposition. Including current market value (approx. RMB 860 million at RMB 16.92/share) and historical dividends, China Life's net investment return exceeds 180%.
This divestment occurs amid Bank of Hangzhou's strong performance: - Share price reached historic highs in 2025 - Convertible bonds successfully triggered mandatory redemption - Q1 2025 net profit grew 17.30% YoY to RMB 6.021 billion - Non-performing loan ratio stood at 0.76% with >530% provision coverage
Financial professionals attribute the timing to multiple factors: 1. Valuation Considerations: Bank of Hangzhou trades near 1x price-to-book ratio (vs sector average 0.63x), making current levels attractive for profit-taking. 2. Asset Rotation Strategy: Insurance capital typically reallocates gains from high-performing assets to lower-valuation opportunities. 3. Capital Optimization: The RMB 15 billion convertible bond conversion strengthened core tier-1 capital adequacy above 9.7%, reducing strategic shareholder necessity.
Market observers note such divestments represent routine portfolio adjustments rather than fundamental concerns. While China Life exits, other institutions like New China Life Insurance acquired 5.45% of the bank for RMB 4.3 billion earlier this year. Changjiang Securities research maintains that insurance capital continues targeting high-quality bank stocks, citing Bank of Hangzhou's leading profitability and sustainable ROE advantages.
The transaction window opens three trading days post-announcement, allowing disposal via block trades or centralized bidding within three months. As a pre-IPO shareholder exceeding 5% ownership, China Life remains subject to disclosure obligations despite its current 0.70% stake.
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