Chinese insurer PICC will make its trading debut in Hong Kong Friday after raising a lower-than-expected $3.1 billion from the city’s biggest share sale this year, amid choppy global market conditions.
The state-owned firm has sold 6.898 billion new shares at HK$3.48 ($0.45) each — near the bottom end of its indicative price range of HK$3.43-HK$4.03 — in the world’s fifth largest initial public offering (IPO) this year.
Selling at the top end of its price range would have seen the Beijing-based People’s Insurance Company of China, the nation’s fourth largest insurer, raise up to $3.6 billion. PICC units rose 3.4 per cent to HK$3.60 Thursday in so-called grey market trading ahead of their official debut, Dow Jones Newswires reported, citing trading firm PhillipMart, amid a muted broader market which closed flat.
After pricing its shares at the lower end of the range PICC has secured 17 cornerstone investors, committed to investing a total of $1.82 billion.
These include the US-based American International Group insurance firm and China’s biggest life insurer by premiums, China Life Insurance. Cornerstone investors are given the option to buy vast portions of stock in an IPO if they agree to hold the shares for a certain amount of time. PICC intends to use the net proceeds from the share sale to strengthen “the company’s capital base to support its business growth”, it said in an earlier statement.
Founded in 1949, PICC was the first nationwide insurance company in China, which today has 130 million individual insurance customers and about 2.4 million institutional clients.
There had been hopes that the Chinese insurer’s IPO could reverse a stagnant IPO market in Hong Kong, which took a hit after Chinese companies started to worry about slow economic growth.
But figures show the Asian financial hub has only raised about $10.16 billion from new listings so far this year, a plunge of 66 per cent from the same period last year, according to data provider Dealogic.
Hong Kong, Dec 6, 2012 (AFP)
