Investor yen helps AIA raise US$18b
By Denny Thomas and Kennix Chim |
October 25, 2010, Monday
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Print Edition
Print Edition
AIA, the Asian life insurance arm of AIG, raised US$17.9 billion by pricing its Hong Kong IPO at the top of its range as investors piled into the most attractive offering in the world's hottest financial market.
The pricing of the initial public offering, set to be the world's third-biggest, comes as new listings abound in Asia. It ended a long-running saga for American International Group, which tried and failed to sell AIA to UK's Prudential earlier this year.
AIG plans to use some of the proceeds of the AIA sale to pay back part of the US$182.3 billion bailout that it received from the United States government during the financial crisis.
AIA has said that the IPO was priced at HK$19.68 (US$2.54) each and that it exercised its upsize option. If the underwriters exercise the overallotment option, the IPO size would rise 15 percent to US$20.5 billion.
AIA's will start trading on Friday.
"Investors did not dare to miss this jumbo deal as the market has ample liquidity and the sentiment is very strong," said Antonny Cheng, a fund manager at Gain Asset Management.
AIA has been in Asia for nearly a century. Unlike other foreign insurers, AIA wholly owns entities in China, Indonesia, Malaysia, Thailand and Vietnam.
Life insurance premiums in the Asia-Pacific region are forecast to grow at a compound annual rate of 12.3 percent between 2009 and 2014, Sigma Swiss Re estimates, compared with flat to modest growth in other parts of the world.
Still, the company faces a challenge with expanding in China, where the mainland's top industry players dominate and more overseas competitors are flooding the market.
The IPO will value AIA at US$30.5 billion at the top end, with AIG holding a 41.6 percent stake that would drop to 33 percent if it exercises an option to issue more shares.
"It's more or less fully valued after the shares were sold at the top end," said Francis Lun, general manager with Fulbright Securities. "Still, one could expect a 5 percent upside on debut."
Asian IPOs raised US$90 billion in the first three quarters of 2010, more than double the total from the US, Europe, the Middle East and Africa, according to Thomson Reuters.
The pricing of the initial public offering, set to be the world's third-biggest, comes as new listings abound in Asia. It ended a long-running saga for American International Group, which tried and failed to sell AIA to UK's Prudential earlier this year.
AIG plans to use some of the proceeds of the AIA sale to pay back part of the US$182.3 billion bailout that it received from the United States government during the financial crisis.
AIA has said that the IPO was priced at HK$19.68 (US$2.54) each and that it exercised its upsize option. If the underwriters exercise the overallotment option, the IPO size would rise 15 percent to US$20.5 billion.
AIA's will start trading on Friday.
"Investors did not dare to miss this jumbo deal as the market has ample liquidity and the sentiment is very strong," said Antonny Cheng, a fund manager at Gain Asset Management.
AIA has been in Asia for nearly a century. Unlike other foreign insurers, AIA wholly owns entities in China, Indonesia, Malaysia, Thailand and Vietnam.
Life insurance premiums in the Asia-Pacific region are forecast to grow at a compound annual rate of 12.3 percent between 2009 and 2014, Sigma Swiss Re estimates, compared with flat to modest growth in other parts of the world.
Still, the company faces a challenge with expanding in China, where the mainland's top industry players dominate and more overseas competitors are flooding the market.
The IPO will value AIA at US$30.5 billion at the top end, with AIG holding a 41.6 percent stake that would drop to 33 percent if it exercises an option to issue more shares.
"It's more or less fully valued after the shares were sold at the top end," said Francis Lun, general manager with Fulbright Securities. "Still, one could expect a 5 percent upside on debut."
Asian IPOs raised US$90 billion in the first three quarters of 2010, more than double the total from the US, Europe, the Middle East and Africa, according to Thomson Reuters.
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