Mainland China’s Sunshine Insurance seeks US$2 billion listing in boost for Hong Kong’s flagging IPO market, sources say

Sunshine Insurance has applied to list in Hong Kong and may seek to raise up to US$2 billion, which would make it a frontrunner for biggest initial public offering of the year so far, according to two sources familiar with the deal.

The mainland Chinese insurer has submitted its application documents, which do not reveal the size or likely time frame of the IPO. However, two sources told the Post that the company would like to list its shares this year and raise between US$1 billion and US$2 billion.

Should it achieve the high end of that target, it would be in a two-horse race for biggest IPO of 2022 with private equity firm PAG, which is also targeting up to US$2 billion according to sources. PAG filed to list its shares in Hong Kong last month.

Sunshine is the second big insurer to have applied for a Hong Kong stock flotation recently.

FWD Group Holdings, the Asian insurer backed by Hong Kong billionaire Richard Li Tzar-kai, filed an application on February 28. The company could seek to raise about US$1 billion in its share sale, a Bloomberg report quoted a source as saying.

The two mega insurance flotations will be much needed to boost the local IPO market. Hong Kong’s main board only saw 11 companies raise US$1.72 billion in the first quarter, a 90 per cent drop from a year earlier, according to Refinitiv.

The volatile stock market and China’s wide-ranging regulatory crackdown have stifled appetite for listings.

JL Mag Rare-Earth, which raised US$544.6 million in January, was the city’s largest IPO in the first quarter but only ranked 11th worldwide.

The number of filings has improved slightly as the market stabilised lately, with 23 companies filing for IPO in the first 20 days of April. That compares with full-month figures of 28 in each of January and February, 22 in December and 15 in November.

Hong Kong Exchanges and Clearing (HKEX), which operates the bourse, is working hard to boost the city’s standing as a fundraising hub. It hosted its first corporate webinar on Wednesday for listed insurers to communicate with analysts and investors, and plans to host similar events for companies from other industries in the future.

“HKEX will have an important role to play in helping insurance companies raise capital to fuel their growth ambitions,” said Nicolas Aguzin, its chief executive.

There are 17 insurance companies listed in Hong Kong, representing 5.5 per cent of total market capitalisation. They include some of the biggest mainland insurers such as China Life, Ping An Insurance, as well international players such as Asia’s largest insurer AIA and the UK’ Prudential.

Total premiums for Hong Kong’s insurance industry amounted to over HK$600 billion (US$76.92 billion) last year, according to data from the Hong Kong Insurance Authority.

“The insurance industry plays an instrumental role in making Hong Kong a world-class financial centre,” Aguzin said. “Looking ahead, Hong Kong will continue to expand its role as a regional insurance hub.”

Founded by Zhang Weigong in 2004, Sunshine Insurance operates mainly through Sunshine Life, offering about 130 products covering life, health and accident insurance, according to its IPO prospectus.

It made a net profit at 6.02 billion yuan last year, 6 per cent higher than a year earlier.

Sunshine Life ranked 12th by size among mainland Chinese life insurers in 2020, with a market share of 1.7 per cent, according to government data.

It also offers property and casualty insurance through Sunshine P&C.