Chinese bank and reinsurer plan IPOs

HONG KONG • Sino-foreign investment bank China International Capital Corp (CICC) and reinsurer China Reinsurance (Group) Corp have both received approval from the Hong Kong stock exchange to hold initial public offerings (IPOs) worth a combined US$3 billion (S$4.2 billion), sources said.

The IPOs by China's top investment bank and biggest reinsurer signal a possible revival of what has been a quiet quarter for Hong Kong's capital market, the Wall Street Journal said in a report.

CICC plans to raise US$1 billion and China Re US$2 billion by going public some time this year, although the exact dates are yet to be decided. CICC may start its offering in the next few weeks, sources told Bloomberg.

The once-dominant investment bank, which has lost ground to rivals, is pushing ahead with the offering after a US$5 trillion stock rout that threatens to crimp earnings in the nation's securities industry.

CICC ranks eighth among underwriters of stock sales in Hong Kong this year and 11th for offerings in China, data compiled by Bloomberg shows. The company's revenue and other income surged 51 per cent to 6.16 billion yuan (S$1.3 billion) last year, according to a July 22 pre-IPO filing.

China Re's IPO may start as soon as next month. The group will add to the US$20.1 billion raised through first-time share sales in Hong Kong this year, up from US$16.9 billion in the same period last year, data compiled by Bloomberg shows.

The company had a 33.1 per cent share of China's property and casualty reinsurance market in 2013 and 37.7 per cent of the life and health reinsurance sector, according to a July 31 exchange filing.

At the end of March, China Re had 139.6 billion yuan of investment assets, the filing shows.

The two IPOs will be the first major offerings since China Railway Signal & Communication's US$1.4 billion Hong Kong IPO last month.

The Hang Seng Index, which is weighted heavily with mainland Chinese stocks, has fallen 17 per cent in the third quarter so far as mainland stocks tumbled, thus weighing heavily on investor sentiment.

A Hong Kong-based external spokesman for CICC declined to comment.

A version of this article appeared in the print edition of The Straits Times on September 19, 2015, with the headline 'Chinese bank and reinsurer plan IPOs'. Print Edition | Subscribe