Era ends for mega mainland IPOs

The initial public offering of People's Insurance Co (Group) of China last week was notable as Hong Kong's largest in two years. Bankers still do not anticipate it augurs a new round of big share sales by mainland firms.

The reason: most of the biggest state-owned companies have already gone public in the past 15 years in Shanghai and Hong Kong. Private-sector businesses, beset by shrinking profits amid overcapacity and rising labour costs, are not likely to fill the void soon, according to investment bankers and deal lawyers.

"The days of US$20 billion Chinese IPOs are probably gone," said Fang Fang, JPMorgan Chase's chief executive in China.

In July 2010, Agricultural Bank of China raised US$22.1 billion in Hong Kong and Shanghai, the biggest offering in history.

The lack of mega deals comes amid a pronounced slump for offerings in Hong Kong of any size. The value of initial share sales has fallen to US$6.6 billion this year from US$58 billion in 2010, putting the city on pace for its worst year since at least 2003, when companies raised US$7.5 billion.

This year's total includes the US$3.1 billion offering of PICC Group, which required US$1.82 billion of pre-negotiated investments with American International Group and 16 other so-called cornerstone investors to complete the deal.