Offering by PICC a record for year

PICC Property & Casualty has wrapped up this year's most oversubscribed initial public offering in money terms by pricing it at the top of an indicative price range of HK$1.80 to raise $5.4 billion - the largest IPO this year.

The retail portion, which closed on Thursday, froze as much as US$10 billion of retail investors' money and attracted subscriptions of about 140 times the number of shares on offer, underwriting sources said yesterday.

Demand for the institutional portion was equally robust, with investors pledging interest of US$10 billion - as yet unpaid - to be part of PICC, they said. That was about 15 times the shares available to institutions.

The high level of retail interest will trigger a clawback from the institutional tranche, giving retail investors 50 per cent of the shares on offer, instead of just 10 per cent initially.

Trading in the company's H shares is expected to begin next Thursday.

Morgan Stanley and China International Capital Corp are co-sponsoring the share offering.

At HK$1.80, PICC is priced at 14.5 times this year's projected earnings or an estimated 1.25 to 1.3 times forecast book value this year.

The aggressive pricing of PICC, China's largest property insurer, will help bolster the share sales of China Life Insurance and Ping An Insurance as they head for a listing.

Life insurers usually command a premium over property insurers.

China Life, the nation's biggest insurer, is expected to tap about US$2 billion by the end of next month, while No2 Ping An should collect $1.5 billion early next year.

PICC's IPO also marks the first international share offering by a mainland financial institution, as a series of insurance and banking privatisations looks set to grip investors' attention over the next few months.

The IPO is also this year's second-largest in Asia-Pacific, excluding Japan.