NewChina Reinsurance IPO hot for uniqueness despite China slowdown
With 93 per cent of the country's insurers on its books, the world's eighth-largest reinsurer is expected to raise US$2 billion from its float
With the China slowdown story setting investors' nerves on edge around the world, analysts say there is still one company that could be worth buying - the country's dominant reinsurer.
China Reinsurance, the biggest provider of insurance to insurers in China, started pitching its US$2 billion Hong Kong initial public offering to investors this week. Reuters quoted an unnamed source as saying that based on strong feedback, it would offer the shares in an indicative range of HK$2.25 to HK$2.70 each, equivalent to a forecast price-book ratio of 1.12 to 1.3 times for this year.
The deal is set to be Hong Kong's biggest listing since late May, when Huatai Securities raised US$4.5 billion. More recent efforts, such as this week's US$248 million offering from Imax China Holding, have received a lukewarm reception from retail investors.
As the only domestic reinsurance group in China, China Re's clients include 93 per cent of the country's insurance companies, according to its prospectus. It is the largest in Asia, and was eighth-largest in the world last year in terms of reinsurance premiums income.
Dayton Wang, an insurance analyst with Guotai Junan International, said the China Re offering could be hot given its market position, although the explosion in Tianjin in August was likely to weigh on annual performance.
"China Re's investment story is focused on its leading position in China's reinsurance market, which enables investors to place a pure reinsurance play in the current investment universe occupied by insurers," he said. "But I would not say the reinsurance market in China is facing explosive [premiums] growth."