People's Insurance Group of China (PICC), which owns the nation's biggest property and casualty insurer, has slashed its fundraising target for listing in Shanghai by CNY4bn ($579m) to about CNY6bn , reports Reuters.
PICC now plans to issue up to 1.8bn A-shares in the IPO and use the proceeds to replenish capital, it said yesterday in a notice to the Shanghai stock exchange. In April, PICC said it was aiming to raise CNY10bn.
The insurer did not provide a reason for slashing the target.
In its statement yesterday, PICC said that following the completion of preliminary price consultations on 1 November 2018, the company will issue 1.6bn A shares at the issue price of CNY3.34 per A share. “The issue price was determined based on several factors including, among others, the net asset value per share before the offering, the remaining price quotation and the proposed number of A shares to be subscribed, the industry, market conditions, the valuation of other listed companies in the same industry, the demand for the funds to be raised and the underwriting risks,” the statement said.
A challenging market is the main reason for the smaller deal size, said a source with direct knowledge of the deal.
Given current market conditions and tightened liquidity, China’s securities regulator won’t let a single issuer raise as much capital as the company initially planned to, as it would siphon off funds from other firms, the source added.
China’s benchmark Shanghai Composite index dived to near four-year lows last month, prompting multiple government agencies to line up measures to support companies struggling with margin calls and financing.
A PICC listing in China would come more than four years after the company went public in a $3.1bn offering in Hong Kong. PICC is the parent of PICC Property and Casualty.