PICC gets approval for $1.6b float

Regulators approve insurance giant's plans to list on Shanghai bourse

The People's Insurance Co (Group) of China Ltd, the country's largest property and casualty insurer by premium income, has received regulatory approval to raise at least $1.6 billion through a long-delayed IPO on the Shanghai Stock Exchange.

The China Securities Regulatory Commission approved PICC's listing plan on Tuesday, meaning that the State-owned insurer will finally be able to list its shares on the mainland A-share market six years after it went public in Hong Kong. The IPO will be the largest share offering on the mainland so far this year.

PICC will become the fifth dual-listed Chinese insurer with shares on both Hong Kong and mainland exchanges, joining four other major insurers: China Life Insurance Co Ltd, Ping An Insurance Group Co of China Ltd, China Pacific Insurance Group Co Ltd and New China Life Insurance Co Ltd. The five companies are the largest insurers in the country.

PICC applied to issue up to 4.6 billion shares, equivalent to 9.78 percent of its total equity base, according to the company's prospectus filed with the securities regulator.

It had been planning a mainland listing for a number of years, Reuters reported earlier, citing people familiar with the group's strategy. However, changes in the mainland's listing rules and temporary suspensions of IPOs after turbulence in the stock market had delayed the plan, the report said.

The Ministry of Finance is PICC's largest shareholder, owning 70.47 percent of its total shares as of the end of last year. After the share offering in Shanghai, the proportion of the ministry's share ownership is expected to be diluted to 63.58 percent.

With total assets of 988 billion yuan ($154 billion), PICC reported net profit of 23.8 billion yuan last year, with its property and casualty business contributing more than 80 percent, according to the company's IPO prospectus.

PICC shares closed at HK$4.04 ($0.52) in Hong Kong on Wednesday. Its share price has surged by more than 25 percent since it officially announced the A-share listing plan last May.

Analysts said that PICC, while consolidating its leading position in the property and casualty business, needs to boost the strength of its life and health insurance arms to better balance its business structure.

Xu Hanbo, an analyst at investment bank CMB International, said that the current low valuation of PICC's shares appears to be attractive for investors, and the company's latest digital strategy will help lift its market share and profitability.