Ping An’s convertible bond aims for 5% return on proceeds

Proceeds will be used to support initiatives in healthcare and eldercare.

Ping An has announced a proposal to issue a $3.5b convertible bond (CB, which can be converted into H-shares, featuring a 0.375% to 0.875% coupon and a 25% to 30% conversion premium. 

This issuance is estimated to result in a 1% or 3% dilution in book value per share (BVPS) and earnings per share (EPS), reported Bloomberg as referenced by Jefferies Equity Research.

Proceeds will be used to develop core business, strengthen the capital position, and support initiatives in healthcare and eldercare. The bond matures in 2029, with an investor put date around July 2027.

If fully converted, the share count could increase by 3.3%, leading to ~0.5% book value dilution and ~2.9% EPS dilution, assuming a 5% return from the proceeds. 

Despite some investor scepticism about potential dilution and M&A implications, the reported terms align with market expectations. Ping An confirmed the plan but did not specify the deal terms.