PICC restarts HK side of planned dual listing

The People's Insurance Company (Group) of China (PICC), one of the country's biggest insurers by premiums, kicked off pre-marketing activities Thursday for an upcoming initial public offering (IPO) in Hong Kong, effectively resuming the company's efforts to pursue an IPO on the region's stock exchange after it shelved a dual listing plan five months ago, according to local media, citing sources with knowledge of the matter.

Specifically, the insurance giant intends to raise $4 billion from its Hong Kong IPO, which would be the area's largest offering of the year after Haitong Securities Co's $1.8 billion IPO in April.

In July, PICC announced it was looking to raise up to $6 billion from a dual listing on markets in Shanghai and Hong Kong, but eventually put the brakes on these plans as securities regulators on the mainland held back on approving or denying the insurer's listing application.

PICC is not the only firm in recent months which has idled its dual fundraising plans due to a delayed nod from the China Securities Regulatory Commission (CSRC), a development which experts say underscores the different regulatory environments which exist on the mainland and Hong Kong.

Bank of China and China Merchants Bank were also forced to postpone additional share floats on mainland stock exchanges for the same reason earlier this year.

In most of the world's mature capital markets, including Hong Kong, few companies have trouble listing, provided they can guarantee that the information on their prospectus is accurate; but on the Chinese mainland, the CSRC takes into consideration a multitude of factors within the market before it rejects or approves IPOs or other fundraisers, Qian Qimin, deputy director of the market research department of Shenyin & Wanguo Securities, told the Global Times.

Since the beginning of 2012, the CSRC has slowed its IPO approval pace due in large part to concerns about thinning market liquidity, and these concerns may have contributed to PICC's delayed IPO verdict, Cai Junyi, chief investment consultant from Shanghai Securities, told the Global Times.

PICC originally aimed for a simultaneous listing in the hopes that its mainland IPO valuation would push up its shares in Hong Kong, said Qian.

He explained that price-earnings ratios of mainland stocks are usually two or three times larger than on the Hong Kong market.

"Despite the lack of approval for a mainland listing though, the clock is ticking on [PICC's] Hong Kong listing and the company has to act quickly if it wants to tap the market," said Cai.

According to regulations at the Hong Kong Stock Exchange, a company's IPO application will become invalid if it does not list within six months of filing its prospectus.