Ping An Insurance (Group) Co, China's second-largest life insurer, is set to launch the country's second-biggest domestic initial public offering (IPO) in March after it received approval from the regulator yesterday.
"We expect Ping An's issue price to fall into the range of 35 to 40 yuan," said Luo Yi, an analyst with China Merchants Securities. "And its debut price will be higher than 50 yuan."
Ping An, 19.9 percent-owned by HSBC, applied to the China Securities Regulatory Commission to issue up to 1.15 billion A shares in a Shanghai listing to raise over 40 billion yuan, beating China Life's 28 billion yuan Shanghai IPO.
Yu Bin, an analyst with Shanghai-based Shenyin & Wanguo Securities Co, said Ping An's shares would be priced lower than China Life's.
"Ping An's A-share price will be around 95 to 90 percent of that of its H shares," Yu said.
Ping An's Hong Kong-listed shares closed at HK$38.35 yesterday, up 0.92 percent.
Insurance stocks have been highly sought-after by investors as a result of the industry's growth potential in China. Of the country's 1.3 billion people, less than 4 percent have insurance coverage, leaving huge scope for development.
China Life's A shares have more than doubled since it listed on January 9.
"Compared with China Life, Ping An is stronger in terms of business efficiency and the building up of its financial holding group," said Luo Yi.
For the first nine months of 2006, Ping An posted a net profit of 3.677 billion yuan, far exceeding its 2005 earnings of 3.338 billion, it said.
Ping An collected 37.3 billion yuan in premiums in the first half of 2006 to command a domestic market share of 16.5 percent, second only to China Life's 111.4 billion yuan and 49.4 percent.
Goldman Sachs Gaohua Securities Co, Galaxy Securities and CITIC Securities will be the lead underwriters.
The Shanghai offer, at its maximum size, would account for 15.66 percent of Ping An's expanded capital of 7.345 billion outstanding shares.
The mainland's bullish stock market, where the main index soared 130 percent last year, has prompted major mainland companies listed in Hong Kong to make plans to return.
China's Industrial Bank drew 1.16 trillion yuan in subscriptions from retail and institutional investors, a record for a domestic IPO.
China's Bank of Communications is expected to raise about US$2.6 billion through a listing in Shanghai in March.
(China Daily January 31, 2007)