홍콩 IPO: PICC (People's Insurance Co. of China)

[프란치스코]

Big Investors Flock to PICC Offering

HONG KONG—The initial public offering of People's Insurance Co. (Group) of China Ltd., one of the biggest offerings in the world this year, is attracting a slew of large buyers, from U.S. insurer American International Group Inc. AIG to the company that runs China's electric power grid.

AIG, which traces its roots to an insurance organization founded in Shanghai in 1919, is planning to invest $500 million in PICC, the insurer said Thursday. It will be one of its biggest investments in Asia since being bailed out by the U.S. government during the financial crisis. The planned investment in China's fourth-largest insurer would be a reversal for AIG, which was forced by the U.S. government to sell most of its crown jewel Asian life-insurance operation, AIA Group Ltd., to help repay bailout money.

The U.S. insurer also said it plans to form a joint venture with PICC's life insurance unit that will distribute life insurance and other products through a specialized agency force throughout the country, focusing on major Chinese cities. AIG said it wouldn't sell more than 25% of PICC's shares in the next five years without the Chinese insurer's consent, unless the legal documents for the joint venture haven't been drawn up in the next six months.

The joint venture may put AIG in competition in China with AIA, the only foreign company that has a full license there. China's potentially lucrative market is still dominated by domestic players, and AIA's share is just between 1% to 2%.

The IPO of PICC, which is seeking to raise up to $3.6 billion, is the biggest offering of a Chinese state-owned company since 2010 and could mark a revival of the Hong Kong IPO market. For the past three years, Hong Kong's market has been the world's hottest, but it has suffered this year as investors soured on Chinese companies and grew worried about slowing growth.

PICC will begin taking orders from institutional investors Thursday and expects the shares to start trading early next month. The IPO of the government-owned company, which makes most of its revenue from property and casualty insurance, is set to be the fourth-biggest offering globally this year and the largest by a Chinese company world-wide since Agricultural Bank of China Ltd. raised $22.1 billion in Hong Kong and Shanghai in 2010.

AIG has property-casualty operations around the globe, while its life-insurance business is now U.S.-focused, after the sales tied to its bailout.

In general, U.S. life insurers are struggling to find ways to expand profitably in the U.S., amid ultralow interest rates and a sluggish economy, and they see Asia as a source of more robust growth for many years to come. PICC also sells health insurance and life insurance, among other businesses.

AIA, in which AIG now holds just a 13.69% stake, has been aggressively expanding in Asia. It said in October it will buy ING Groep NV's fast-growing Malaysian life-insurance operations for $1.73 billion in cash, the first major acquisition since its IPO in 2010. AIA, whose shares are up 54% from its offering price of 19.68 Hong Kong dollars (US$2.54), recorded a 10% rise in its first-half net profit this year.

AIG would own around 2.7% of PICC if the IPO priced at the top end of the indicative range of HK$3.42 to HK$4.03. The final price is expected to be set next week. AIG already owns 9.9% of PICC's Hong Kong-listed PICC Property & Casualty Co. unit, which it bought into in 2003.

PICC has gathered a who's who list of big Asian investors to buy shares of its IPO. About 95% of the offering is expected to go to institutional investors, and a big piece of that will be taken up by so-called cornerstone investors.

Cornerstone investors, an Asian phenomenon, get guaranteed allotments of shares in an IPO and in return agree to hold the shares for a set period. Having influential names as cornerstone investors can help attract other investors, a boon in a year when Hong Kong has been hit by a slump in appetite for new shares. New listings in the city have raised $6.5 billion this year, the lowest year-to-date level since 2003's US$3.1 billion, according to Dealogic.

PICC's IPO is already half sold if shares price at the top end of the planned range. A total of 16 cornerstone investors, including AIG, have committed to US$1.72 billion worth of shares, said the three people with direct knowledge of the matter.

State-owned China State Grid Corp., the country's largest power company, is buying US$300 million of stock, making it the second-largest single cornerstone investor after AIG, the people said.

PICC, which is scheduled to list on the Hong Kong stock exchange Dec. 7, is planning to sell 6.898 billion new shares, or 16.7% of the company's enlarged share capital.

China International Capital Corp., Credit Suisse Group, Goldman Sachs Group Inc. and HSBC Holdings PLC are the sponsors of the deal. Twelve other banks are also handling the deal.

(인용: Leslie Scism & Erik Holm, WSJ)