People's Insurance Company (Group) of China, otherwise known as PICC, is set to hit the market in Hong Kong this month in what could be the largest IPO in Asia (excluding Japan) this year. The deal was initially scheduled for last July as a larger, dual listing in Hong Kong and Shanghai, although the mainland portion of the offer has been discontinued.
The mooted fundraising of up to US$4 billion is daunting. Listings for US$500 million have proven challenging recently; one can only guess how a float this size might fare.
If I were a betting man, though, I'd wager that PICC will get done - but the army of bookrunners will have their work cut out.
Investors may remember how well they did with the float of PICC P&C (a subsidiary 69 per cent owned by PICC), which listed in Hong Kong in 2003. It was the first big mainland insurer to list offshore and came to market after a huge state-led overhaul of the sector.
People viewed the mainland insurance market as high growth, but its profits were overly dependent on the mainland % equities market and also undermined by products with guaranteed rates of return - and were therefore erratic.
Long story short, PICC P&C was a hit. Its share price is up 5.7 times since listing, and it also paved the way for other successful Hong Kong offerings of mainland insurance stocks, such as Ping An and China Life. Investors took a chance on this stock and it paid off.
Certainly, the growth story still rings true.
