PICC Group will finally kick off bookbuilding tomorrow, Thursday 22 November, for an IPO that could reach US$3.6 billion, and even top US$4 billion, assuming exercise in full of the over-allotment option. This would make it the largest IPO so far this year in Asia ex-Japan, ahead of the flotation of Felda Global Ventures in Malaysia.
Here follows a quick recap of the parametres for the deal. The IPO is 100% primary, with 6,898,209,000 shares offered, representing approximately 16.67% of the enlarged share capital of the company. On top of this is an over-allotment option of 1,034,731,000 shares, representing 15% of the base offering.
The books are expected to close on 29 November, with the Hong Kong public offer from 26 November to 29 November. Listing is expected on 7 December.
Syndicate:
The syndicate, which was still a moving feat, has now been finalized as follows:
– Joint Sponsors (4): CICC, Credit Suisse, Goldman Sachs and HSBC.
– Joint Global Coordinators (5): CICC, Credit Suisse, Deutsche Bank, Goldman Sachs and HSBC.
– Joint Bookrunners (17): CICC, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Agricultural Bank of China International , BofA Merrill Lynch, Bank of China International, CCB International, Daiwa, Essence, JPMorgan, Citi, Haitong Securities, ICBC International, Morgan Stanley and UBS.
– Joint Lead Managers (17): CICC, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Agricultural Bank of China International , BofA Merrill Lynch, Bank of China International, CCB International, Daiwa, Essence, JPMorgan, Citi, Haitong Securities, ICBC International, Morgan Stanley and UBS.
Price range and valuation:
The H-share IPO price range has been set at HK$3.42-4.03（or RMB2.78-3.28), which translates into:
– A pre-money group valuation of RMB96.0 – 113.3 billion.
– An offer size of US$3.05 – 3.60 billion (pre-greenshoe), and of US$3.50 – 4.14 billion (post-greenshoe)
– A 2012E Life & Health Price / EV of 1.18 – 1.63x
– A 2012E Life & Health NBM of up to 7.32x (all multiples assuming RMB15 billion of new funds raised to be inserted into the Life & Health business and minority shareholders participating in the capital injection on a pro-rata basis). For reference, China Life trades at a P/Life EV of around 1.6x and at 8.7x NBM, while PingAn trades at P/Life EV of about 1.3x and at 5.6x NBM.
The lower end of the RMB2.78 per share is only 8% higher than the RMB2.57 per share paid by the National Social Security Fund (NSSF) in June 2011.
Cornerstones (17):
All locked-up for six months, as is usual in Hong Kong. At the bottom end of the range, the institutional offer (95% for this IPO) is 63.7% covered by cornerstone demand.
AIG (US$500m)
State Grid (US$300m)
Sinomach (US$150m)
Munsun AM (US$140m)
Sinosure (US$100m)
China Life (US$100m)
Yuexiu REIT (US$100m)
China Re (US$70m)
Spacechina (US$50m)
China Southern (US$50m)
SCOR Re (US$50m)
Tokio Marine (US$50m)
Zrt (US$50m)
Zijin (US$50m)
Pinpoint (US$40m)
Russian Insurance (US$25m)
Fosun (US$20m)
Total: US$1.845 billion
At the time of writing, the bookrunners were still in discussions with other potential cornerstone investors for additional commitments – although that now appears rather unlikely. Including anchor orders, the book of demand was reportedly covered at the time of publication.