PICC mulls delay for A-share offer

Insurer's planned flotation in Shanghai sees another setback as HK portion may proceed first amid efforts to stave off falling markets

PUBLISHED : Tuesday, 04 September, 2012, 12:00am
UPDATED : Tuesday, 04 September, 2012, 2:32am

People's Insurance Company (Group) of China (PICC), which had planned a dual listing on the Hong Kong and Shanghai stock exchanges, now looks likely to proceed with a smaller offering in Hong Kong and delay the Shanghai portion.

According to two people with knowledge of the matter, PICC, one of China's top five insurers in terms of premiums, may seek as much as US$3 billion in an initial public offering of shares in Hong Kong next month or November.

"PICC tried listing this June in Hong Kong, but the market demand was too low so they dropped the initial plan," said one person following the deal. "This is their second effort this year."

The state-owned insurer may put the Shanghai portion of the sale on hold because Chi- nese regulators have yet to approve the deal, according to the people, who asked not to be identified as the deliberations are private.

PICC had aimed to raise as much as US$5 billion through the offering in Hong Kong and Shanghai, people familiar with the deal said in May.

That would have made it this year's third-biggest stock market debut globally after Facebook and Japan Airlines, and the largest in Hong Kong since October 2010, data compiled by Bloomberg show.

The insurer, based in Beijing, received approval from the Hong Kong stock exchange in June to sell shares in the city, according to the people.

Chinese regulators may be slowing listings approvals to avoid putting additional pressure on a stock market that has lost 19 per cent in the past year, the people said. PICC may still try to sell shares in Shanghai after listing in Hong Kong, they said.

Proceeds from the offering may boost the group's ability to inject more capital into its Hong Kong-listed unit, PICC Property & Casualty, which is China's biggest non-life insurer and contributes more than half of the parent company's profit.

Asked for comment, Zhang Qing, general manager of the reinsurance business at PICC Property & Casualty, said he is not aware of any delay in a Shanghai listing.

He said the parent company still aims to have a dual listing within this year.

China's national pension fund invested 10 billion yuan (HK$12.23 billion) for a stake of about 11 per cent in PICC Group, paving the way for its listing, chairman Wu Yan said in an e-mailed statement in June last year.

The state-owned group also has units in life insurance, health insurance, asset management and insurance brokering.

PICC Group is ranked fifth in the country with life insurance premium income of 45.4 billion yuan in the first seven months of this year, according to data on the website of China's insurance regulator.

China Life Insurance was first with 203.3 billion yuan, the website shows.

New China Life Insurance, the nation's third-largest life insurer, raised US$1.9 billion from an offering in Shanghai and Hong Kong in December to bolster its capital and solvency ratios.

The company's Hong Kong-traded shares have lost 18 per cent from their offer price.