China Life Insurance Co (中國人壽) raised HK$23.5 billion (US$3 billion), near the top end of expectations, amid frenzied demand for the world's largest IPO this year, a source close to the deal said yesterday.
The offering by China's biggest life underwriter surpassed British telephone directory firm Yell Group Plc's US$1.94 billion IPO as the largest share sale in the world this year. Investors ordered about 25 times more shares than were available amid the rally in China-related stocks and renewed appetite for initial public offerings.
Orders from big institutions topped US$50 billion as investors clamored for a piece of China's 8-plus percent economic growth and surging domestic consumption fuelled by the country's increasing wealth.
China Life Insurance shares will begin trading in New York on Dec. 17 under the code "LFC" and the next day in Hong Kong.
Small investors in Hong Kong, who queued outside bank branches this week to apply for shares in an IPO frenzy last seen during the dotcom days, committed roughly HK$200 billion (US$25.64 billion) in hopes of landing coveted shares.
The company sold some 6.47 billion shares at HK$3.625 apiece, at the top end of the HK$2.98 to HK$3.65-per-share range, raising a total of HK$23.5 billion. The IPO price values the company at about US$12 billion, as the insurer was selling a quarter of its enlarged share capital.
Investors, emboldened by big first-day gains by recent Chinese IPOs in the city, are ignoring talk of a China bubble forming and risks associated with China's creaky financial sector.
"The scent of free money is in the air again," Morgan Stanley economist Andy Xie (謝國忠) wrote in a note yesterday. "Christmas has come early for Hong Kong."
China Life shares should rise by 25 to 30 percent on their debut, said Geoffrey Galbraith, associate director at South China Securities. This would be a solid gain for such a large offering but would lag the 50-percent pop by another Chinese insurer, PICC Property & Casualty, last month.
"I'll be surprised if it hits 50 percent," Galbraith said.
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