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Strong interest for Chinese insurer PICC’s IPO

Institutional tranche accounts for 95 per cent of the IPO

Gulf News

Hong Kong: Chinese insurer PICC has attracted strong interest from investors for its $3.6 billion (Dh13.2 billion) initial public offering in Hong Kong next month a day after it began taking orders, a report said on Friday.

The institutional tranche, which accounts for 95 per cent of the IPO — one of the world’s biggest share sales this year — has been fully sold after it was launched to institutional investors on Thursday, Dow Jones Newswires reported quoting unnamed sources.

The Beijing-based People’s Insurance Company, the nation’s fourth largest insurance company, will be selling the remaining five per cent of its 6.898 billion new shares to retail investors from early next week.

State-owned PICC had secured 16 so-called cornerstone investors ahead of its order-taking Thursday — including US insurer AIG — which have promised to invest a combined total of $1.72 billion in shares, according to Dow Jones.

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 length of time.

The IPO, scheduled for December 7, could mark a reversal from a stagnant IPO market in Hong Kong, the top such market for the past three years which took a hit after Chinese companies grew worried about slow economic growth.

AIG said on Thursday it would invest $500 million in PICC’s IPO and will be forming a joint venture with the Chinese insurer, in a move to boost its presence in China.

The tie-up puts AIG in competition with its former Asian unit AIA, in which it owns about a 13.7 per cent stake, as it tries to break into a market where domestic players dominate.