US$3b offering by state insurer PICC seen heating up Hong Kong market
Initial public offering by state-owned PICC may help revive the city's famed fundraising prowess, says global accounting firm
A widely expected US$3 billion share offering by state-owned People's Insurance Co (Group) of China (PICC) might help revive IPOs this month, according to Deloitte Touche Tohmatsu.
The global accounting firm said Hong Kong was succeeding in attracting more listings from overseas firms as the city remained an important gateway to the mainland. However, it says, the city might not retain its crown as the world's largest listings market for the fourth year running as the prospect of flotations by big state-controlled enterprises looked bleak amid signs of weak investor demand and a slump in the mainland stock market.
"Investor sentiment in Hong Kong is gradually picking up after some more positive economic data from China and the US," said Edward Au, a partner with the firm, adding a number of deals - including the long-awaited offering by PICC - are expected to hit the market this month.
Joseph Chan, an investment banker at Bank of China International, said the listings market was about to heat up again with a wave of share placements.
"Investors are showing strong buying interest in a number of sectors, with focus on blue-chip stocks that offer ample liquidity and fair discount," Chan told the South China Morning Post.
According to two people familiar with the PICC deal, the company has started a pre-marketing campaign to raise up to US$3 billion through an H-shares listing.
It has suspended the A-share placement plan as the Chinese Securities Regulatory Commission has not approved a Shanghai listing.
"The firm may start taking orders from institutional investors by late November or early December as demand for IPOs has revived," one of the two people said, asking not to be named because the deal is private.
Another source said that as PICC was state-owned, its share issue would calm the market jitters and pave the way for a smooth launch.
If it materialises, the PICC float would be the biggest share offering in China this year.
Haitong Securities, China's second-largest securities firm by assets, raised HK$14.4 billion in May, the largest listing in Hong Kong so far this year.
Separately, China Galaxy Securities, the seventh-largest broker on the mainland, is looking at a dual listing in Shanghai and Hong Kong, aiming to raise up to 12 billion yuan, according to IFR.
A number of small-sized deals, including Shanghai-based property firm CIFI and Hong Kong-based restaurant chain Tsui Wah, also seek to raise a combined US$400 million this month, which is viewed as the last opportunity for listing this year as December is a traditionally quiet season.
Deloitte forecast the capital raised in Hong Kong initial public offerings could amount up to HK$90 billion, down by 67 per cent from last year.
New listings in Hong Kong came to HK$49 billion in the first 10 months of the year, down 78 per cent from the same period a year earlier, according to Deloitte data.
Companies in the energy and resources industry accounted for 41 per cent of the total capital raised in Hong Kong last year, followed by financial services firms, which made up 31 per cent.
There were no new listings in Hong Kong in May and September this year.