Debt row with paper delays PICC listing plan
A dispute between state-run People's Daily and People's Insurance Company of China Group (PICC) is delaying the insurer's expected initial public offering. The IPO aims to raise between US$5 billion and US$6 billion, people familiar with the matter said.
PICC, one of China's largest insurers, applied to the Beijing Financial Assets Exchange last month to sell its 55 per cent stake in China Huawen Investment Holding, in which People's Daily also holds a stake.
During the application process, PICC said People's Daily owed 501 million yuan (HK$606.9 million) to China Huawen Investment Holdings. People's Daily recently denied that it or any of its affiliated companies owed the money.
On June 30, Beijing Times, affiliated to People's Daily, ran a People's Daily statement that PICC's claim would 'misguide potential buyers and investors', and that it was trying to 'report the problem through related channels to avoid further damage to China Huawen Investment Holdings'.
A person familiar with the matter said the row had hurt the IPO schedule, as PICC would not like to launch the IPO amid the dispute, preferring to resolve the matter first. PICC could not be reached for comment.
The insurer began a 'pre-roadshow' on July 16 to test demand for its expected listing in Hong Kong and Shanghai.
The company chose China International Capital Corporation (CICC), HSBC and Credit-Suisse to manage the IPO, according to a PICC staffer. CICC said it would act as lead manager, but HSBC and Credit-Suisse had yet to confirm their roles.
The insurer submitted an IPO application to the China Insurance Regulatory Commission in May, according to the person familiar with the matter. The application has yet to receive approval, and the mainland's national pension fund invested 10 billion yuan in the insurer recently, the person said.
Since early May, the Hong Kong-listed stock of PICC's property and casualty business has soared by about 50 per cent. 'PICC's [property and casualty] arm has always been short of capital. Investors expect that once the mother company is listed, P&C will have more capital as well,' said Kenneth Yue, an analyst at CCB International.