Royal and SunAlliance, a Britain-based insurance group, is interested in buying the State-owned shares of Chinese listed companies.

"But (we can buy them) only under the condition that Chinese regulators allow non-State-owned shares to cover the majority of the company's total (shares)," Robert V. Mendelsohn, chief executive and director of the group, said at the recent launching of the group's worldwide international managers' website in Shanghai.

For the moment, State-owned and legal person shares usually cover over 60 per cent of the total of each Chinese listed State-owned enterprise (SOE).

In order to speed up the SOE reform, the central government recently encouraged foreign companies to be involved in the equity restructuring and technological upgrade of Chinese SOEs.

"This is a good sign to show the liberalization of the market," Mendelsohn said.

The proposed merging of A and B shares in China captured the interest of foreign investors, including Mendelsohn and the group he represents.

In the past years, Royal and SunAlliance has invested a total of $1.25 million to buy shares of over 10 Chinese companies listed in Hong Kong, including China Telecome, China Mobile, Huaneng and Everbright. The group has not yet invested in the hard currency B-share market, which is reserved for foreign investors.

Mendelsohn said the group was discussing with Chinese regulators for permission to expand its corporate insurance operation and start offering individual insurance in China.

"The negotiation is rather slow," he said.

But, he said he believed Chinese and foreign investors could be treated equally as foreign companies increase their shareholding in the Chinese market.

(Shanghai Star)