HONG KONG: PICC Property & Casualty Co, a unit of China's biggest car and home insurer, may raise as much as HK$5.1bil in an initial public sale, bankers involved said. American International Group Inc (AIG) will develop products with PICC after subscribing for a third of the stock.
AIG, the world's biggest insurer, had signed a 15-year agreement with PICC, the share sale document said. It will own 9.9% of the company after agreeing to buy 35% of the stock on offer, the share sale document shows.
PICC is selling three billion shares at HK$1.30 to HK$1.70 apiece, said bankers involved in the sale, who asked not to be identified. The price range represented about one to 1.2 times the company's book value, or 10 to 13 times forecast earnings in 2003, they added.
The company is betting a partnership with AIG will ensure success for the share sale, the first by a Chinese insurer overseas, and alleviate concerns of rising competition after China lifts restrictions on foreign rivals in December.
“It's going to be a hot issue – being the first purely Chinese financial institution listing overseas has great scarcity value,'' said Jacky Choi, who helps manage US$1.3bil of investments at Value Partners Ltd.
“AIG's investment is a plus although we've to wait and see the chemistry of both parties working together,'' Choi said.
AIG may pay as much as HK$1.8bil for the stake, based on the top end of the price range.
PICC is selling 28% of its shares and may boost that to 31% by offering 450 million more shares if demand warrants. – Bloomberg
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