Big investors pile into China Life as pricing nears

  • Business
  • Thursday, 11 Dec 2003

HONG KONG: China Life Insurance, marketing the world’s biggest initial public offering (IPO) this year at up to US$3bil, has attracted enough interest from institutional buyers to cover its order book by nearly 10 times, sources familiar with the deal said yesterday. 

The retail portion of the deal, which includes 5% of the shares on offer, is also expected to be oversubscribed after an enthusiastic early response by small investors. 

“Everybody in town is talking about it,” said Alfred Chan, chief dealer at Cheer Pearl Investment. “It’s a goldmine in Hong Kong – anything will sell.” 

Some investors, however, are wary that a bubble is forming, with Hong Kong in the thrall of an IPO mania not seen since the dotcom boom. 

“It’s something we prefer not to get involved in at the moment,” said David Chapman, senior portfolio manager at Towry Law. 

Chapman’s company manages about US$670mil globally but is sitting out the China Life IPO and the massively oversubscribed listing by Great Wall Automobile Holding Co Ltd. 

Chapman says he likes the China story over the medium to long term and would consider buying China Life shares in three months or so, but has a negative near-term view on China stocks. 

State-controlled China Life is selling 6.47 billion shares, or a quarter of its enlarged capital. The institutional portion of its order book closed yesterday afternoon in Asia and Europe and will close today in the United States. 

China Life and its bankers at China International Capital Corp (CICC), Citigroup, Credit Suisse First Boston and Deutsche Bank are expected to set final pricing and allocations late today in New York, which would be Friday here. 

Given the hearty investor response, pricing may be set near the upper end of an indicative range of HK$2.98–HK$3.65 per share, which includes brokerage fees for the US-traded shares, or HK$2.95–HK$3.61 for Hong Kong shares, excluding broker fees. – Reuters 

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