Picc Prop & Casualty : PICC Group Gets Regulator OK for up to US$4 Billion Hong Kong IPO - Source
06/22/2012| 04:57am US/Eastern
-- PICC Group gets regulatory approval for planned Hong Kong listing, a person familiar with the situation says
-- State-owned insurer could raise up to US$4 billion, person says
-- PICC won't start gauging investors' interest next week, person says
-- Yitai Coal plans to start taking orders from institutional investors Wednesday for July listing in HK, another person says
(Adds background on IPOs in Hong Kong in the second paragraph, PICC's response in the fourth paragraph, background in China's insurance industry in the sixth and seventh paragraphs, background on Hong Kong IPO market in the ninth to 10th paragraphs, and Yitai Coal's IPO in the 11th paragraph.)
By Prudence Ho
HONG KONG--State-owned People's Insurance Co. (Group) of China Ltd., one of the country's biggest insurers by premiums, received Hong Kong regulatory approval Thursday for its planned listing in the city, which could raise between US$3 billion and US$4 billion, a person familiar with the situation said Friday.
All eyes are on PICC's listing, which could help restore confidence in Hong Kong's IPO market after a series of scrapped or delayed deals in recent months, but the person said the parent of Hong Kong-listed property insurer PICC Property & Casualty Co. (2328.HK) won't launch pre-marketing immediately, suggesting PICC could struggle to meet its July listing target.
Typically, once an IPO aspirant receives listing approval, it will launch informal meetings within a week to gauge potential interest before taking orders from investors and listing on the Hong Kong bourse.
PICC declined to comment.
The insurer had originally planned to raise US$6 billion from a simultaneous listing in Hong Kong and Shanghai in July, but the simultaneous listing is no longer in the cards because it has yet to receive regulatory approval to list in Shanghai, other people familiar with the situation said earlier.
The PICC deal comes as Chinese insurers' ability to make payments to policy holders has been weakening at a time when China is raising capital requirements for domestic insurers.
China requires its insurers to maintain a solvency ratio of more than 150%, and tapping the capital market will help strengthen PICC's solvency ratio, which measures its ability to meet claims. PICC, which is privately held, doesn't disclose its solvency ratio.
PICC's planned Hong Kong listing is set to be the city's biggest since Chinese brokerage Haitong Securities raised US$1.8 billion from its April IPO
Hong Kong, which has been the world's top destination for listings in the past three years, has seen the amount raised from new listings plunge 85% to US$3.6 billion so far this year, down from US$23.8 billion in the same period a year earlier, according to Dealogic.
Earlier this month, U.K.-based jeweller Graff Diamonds Corp. scrapped its US$1 billion IPO, as investor sentiment soured due to renewed worries over the euro zone debt crisis.
However, things could be looking up for Hong Kong's IPO market. Inner Mongolia Yitai Coal Co. (900948.SH) plans to start taking orders Wednesday for its up to US$1.1 billion July IPO, another person familiar with the situation said Friday. The Inner Mongolia-based coal producer plans to sell 162.7 million shares in a tentative price range of HK$43-HK$53 each.
PICC has picked 17 banks to work on the IPO, but has yet to formally assign banking roles, apart from naming the lead sponsors--China International Capital Corp., Credit Suisse Group AG and HSBC Holdings PLC.
Write to Prudence Ho at firstname.lastname@example.org