Beijing-based China Life Insurance Company is buying a 43.86% stake in the Sichuan to East China Gas Pipeline Company. At the same time, State Development & Investment Corp unit SDIC Communications will acquire a 6.14% shareholding.

In a filing with the Hong Kong Stock Exchange, China Petroleum & Chemical Corp (Sinopec) says it raised 22.8 billion yuan (US$3.3 billion) from the sale of the assets.

Sinopec originally announced that it was looking for buyers for a 50% stake in the pipeline last August. At that time it said that it was looking for no more than 15 investors. The deal releases capital for Sinopec to recycle into new projects, including more investment into pipelines and gas storage facilities, where China has capacity shortages. One of the current objectives of the Chinese government is to bring more institutional capital into infrastructure, with the insurance companies at the forefront. In July of this year the insurance regulator revised its rules to make it easier for insurers to invest in infrastructure.

Chinese insurers, like their counterparts around the world, are looking to generate extra yield for their portfolios in a low yield environment, and are boosting their alternatives allocations, including infrastructure and real estate.

However insurers have a conservative investment approach, and find it difficult to come in at the project development stage for assets such as pipelines. They find it less challenging to acquire equity stakes in operational infrastructure. The Sichuan to East China gas pipeline entered into service in 2010, and connects the Puguang gas field in Sichuan with offtakers in Eastern China.

Majority state owned China Life is the largest life insurance group in China, and also one of the biggest investors on domestic capital markets. In addition to infrastructure, it has been adding to its real estate holdings. Since 2015 Chinese insurance companies have been allowed to invest in overseas real estate. In April 2015 China Life and Ping An Insurance both made their first ever equity investments in US real estate, signing up as co investors on Tishman Speyer’s Pier 4 waterfront development in Boston.  

China’s biggest oil and gas producer PetroChina has already raised capital by selling some of its pipeline assets. Like Sinopec it has been under pressure because of low oil prices.

PetroChina sold a 50% stake in Trans Asia Gas Pipeline Company, which operates pipelines that run into central Asian countries including Uzbekistan. The buyer was China Reform Holdings Corp, which is a state owned investment holding company. This deal was worth 15.5 billion yuan.  

In Europe it is also the insurance companies that are leading the way with investment in infrastrucure. One of the biggest players is German insurer Allianz, which said in April that it plans to double its infrastructure investments over the next two to three years.

Allianz is looking at solar and wind power assets, as well as power grids, roads and airports. Allianz Capital Partners is the in house manager of alternative investments of the Allianz Group, and currently has 15 billion euros under management.