AIA boosts IPO size and raises HK$138b
AIA Group raised a record HK$138.4 billion after its initial public offering was upsized to capitalise on growing interest in the regional insurer.
AIA priced its shares at the top of an indicated price range at HK$19.68 each and also increased the deal size to 7.03 billion shares from 5.86 billion after an adjustment option was exercised.
The IPO could fetch as much as HK$159 billion if the underwriters use their over-allotment option to increase the offering to a maximum 8.08 billion shares.
'AIA has an attraction because its main business is focused on Asia and it still has growth potential and a very famous name,' Ben Kwong Man-bun, chief operating officer of securities firm KGI Asia, said. 'They have the interest of strategic investors and that helps to increase the market confidence in the listing.'
Investors have been vying for a stake in AIA because it is positioned to tap into Asian economic growth as a life insurance and financial services provider in 15 regional markets, including Hong Kong, Taiwan and the mainland, India and Indonesia.
Mark Tucker, AIA group executive chairman and chief executive, said in a statement the IPO would mark 'a critical turning point for AIA' and underpin its position in Asia.
The IPO is set to rank as the largest in Hong Kong. It surpasses Industrial and Commercial Bank of China's H-share listing in 2006, which raised HK$124.9 billion, according to Hong Kong Exchanges and Clearing data.
AIA said the proceeds from the offering would be used for debt repayments by its parent, American International Group, as part of the payback for a massive bailout from the US government.
The IPO comes after AIG failed to sell AIA to British insurer Prudential for US$35.5 billion this summer.
But, investors interested in AIA might have already discounted its parent's financial woes, Kwong said.
'They would rather focus attention on future business expansion plans,' he said. 'But it's a valid concern for the company.'
AIA is set to start trading on Friday. It will have to compete for the market's attention with Hong Kong-listed insurance heavyweights, China Life Insurance and Ping An Insurance (Group).
'But if you have them in your portfolio and you like them then you will have to add AIA,' Martin Marnick, a director at Anand Rathi in Hong Kong, said. 'There are no two ways about it.'
Ping An is the Hang Seng Index's sixth-best performer so far this year, up 29.3 per cent. China Life is down 7.2 per cent on the year, but has zoomed up 16.2 per cent since the start of this month.
Hong Kong's IPO pipeline has picked up this year and is expected to continue flowing after AIA hits the market.
'People are being a bit opportunistic and there are a lot of IPOs coming on the way,' Marnick said.
