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PICC seeks US$3.6b in possibly HK's biggest IPO in over 2 years
Source: Bloomberg News |
November 22, 2012, Thursday
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Print Edition
PEOPLE'S Insurance Co (Group) of China, the nation's largest property insurer, is seeking as much as HK$27.8 billion (US$3.6 billion) in what may become Hong Kong's biggest initial public offering in more than two years.
The insurer will offer about 6.9 billion shares at HK$3.42 to HK$4.03 apiece, according to a regulatory filing yesterday. The highest price values PICC at about 113 billion yuan (US$18 billion).
The IPO would be the largest in Hong Kong since October 2010, when AIA Group Ltd sold US$20.5 billion of shares, according to data compiled by Bloomberg News. Investors have stayed away from new equity amid an economic slowdown in China, discounting a 15 percent gain in the Hang Seng Index this year.
"Even though we've seen some inflows into the market, this kind of money is not too eager to enter the IPO market," said Steven Leung, institutional sales director at UOB Kay Hian Ltd. "This close to the year-end, not too many institutions would like to get involved in such a big issue. Market sentiment is not favorable."
The 44 companies that priced shares in Hong Kong this year shed nearly 9 percent, on average, data compiled by Bloomberg News show.
PICC has commitments for about US$1.85 billion of shares from so-called cornerstone investors, including American International Group Inc which will invest US$500 million, two people with knowledge of the matter said. Cornerstone investors typically agree to hold shares for a fixed period of time in exchange for a guaranteed amount of the offering.
Though the cornerstone investors will make PICC's sale easier, the firm may still find it a challenge to reach the high end of its offering range, Leung said. "The rest depends on how aggressively they're going to place the stock," he said.
The Beijing-based company is the biggest property insurer in China with 147 billion yuan in premium income for the first nine months of this year, according to the website of China Insurance Regulatory Commission.
Excluding its already listed property insurance business, the price range values PICC at 1.18 times to 1.63 times the estimated 2012 embedded value of its life and health insurance business. That compares with 1.6 times at China Life Insurance Co, the nation's biggest life insurer, and 1.3 times at Ping An Insurance (Group) Co.
The insurer will offer about 6.9 billion shares at HK$3.42 to HK$4.03 apiece, according to a regulatory filing yesterday. The highest price values PICC at about 113 billion yuan (US$18 billion).
The IPO would be the largest in Hong Kong since October 2010, when AIA Group Ltd sold US$20.5 billion of shares, according to data compiled by Bloomberg News. Investors have stayed away from new equity amid an economic slowdown in China, discounting a 15 percent gain in the Hang Seng Index this year.
"Even though we've seen some inflows into the market, this kind of money is not too eager to enter the IPO market," said Steven Leung, institutional sales director at UOB Kay Hian Ltd. "This close to the year-end, not too many institutions would like to get involved in such a big issue. Market sentiment is not favorable."
The 44 companies that priced shares in Hong Kong this year shed nearly 9 percent, on average, data compiled by Bloomberg News show.
PICC has commitments for about US$1.85 billion of shares from so-called cornerstone investors, including American International Group Inc which will invest US$500 million, two people with knowledge of the matter said. Cornerstone investors typically agree to hold shares for a fixed period of time in exchange for a guaranteed amount of the offering.
Though the cornerstone investors will make PICC's sale easier, the firm may still find it a challenge to reach the high end of its offering range, Leung said. "The rest depends on how aggressively they're going to place the stock," he said.
The Beijing-based company is the biggest property insurer in China with 147 billion yuan in premium income for the first nine months of this year, according to the website of China Insurance Regulatory Commission.
Excluding its already listed property insurance business, the price range values PICC at 1.18 times to 1.63 times the estimated 2012 embedded value of its life and health insurance business. That compares with 1.6 times at China Life Insurance Co, the nation's biggest life insurer, and 1.3 times at Ping An Insurance (Group) Co.
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