Shares in AIA, the Asian unit of troubled US insurer AIG, soared on their trading debut in Hong Kong yesterday, closing 17 percent higher and underscoring investor interest in the pan-Asian insurer.
AIA shares closed at HK$23.05 after hitting an intraday high of HK$23.15, well above their HK$19.68 initial public offering (IPO) price.
The strong start follows a monster share sale that has so far raised US$17.8 billion and could top US$20 billion if the company exercises certain options.
Photo: Bloomberg
That would make it the world’s second-largest IPO this year, just behind the Agricultural Bank of China’s (中國農業銀行) US$22.1 billion IPO in July.
AIA’s parent had moved to list its Asian unit as part of a plan to repay US taxpayers after receiving a heavily criticized US$182 billion government bailout package at the height of the global financial crisis.
“This is a new beginning for AIA,” CEO Mark Tucker told reporters at a listing ceremony in Hong Kong yesterday.
“Our aim is to make sure we are the leading insurance company in Asia,” he said.
Major institutional investors, including the Kuwaiti sovereign wealth fund and several Hong Kong tycoons, snapped up AIA shares.
Two girlfriends of Hong Kong tycoon Joseph Lau (劉鑾雄) bought a whopping HK$11.2 billion in AIA — half the amount of shares set aside for individual investors, the English-language Standard newspaper reported on Thursday, citing unnamed sources.
Lau, chairman of property developer Chinese Estates Holdings (華人置業集團), denied through a spokesperson that the purchases were made on his behalf, the newspaper said.
Peter Lai (黎永良), sales director at DBS Vickers in Hong Kong, said he expected AIA shares to rise on their trading debut, partly because the amount of shares set aside for institutional investors was well below demand.
“The portion of shares set aside for institutional investors was relatively small, so some of them may be forced to snap up stocks today,” he said.
Some observers have said AIA is a good bet, pointing to its reach across 15 Asian countries and the company’s healthy balance sheet. The insurer booked a net profit of US$1.75 billion last year.
“AIA will be going into China and India’s emerging markets, both of which have very low insurance penetration rates,” Lai said. “The pie is huge.”
Others are less convinced of AIA’s growth potential, noting that it has lost market share in some countries despite being a well-known brand.
“Investors are in Asia for growth. Today’s AIA unfortunately doesn’t measure up too well,” Patricia Cheng (鄭愛晶), an analyst at Hong Kong brokerage CLSA, wrote in a report this month.
AIA’s “influence has been declining across the board. It’s already lost the top positions in China [among foreign operations], Hong Kong and Singapore,” she wrote.
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