* Biggest Hong Kong IPO since 2010 prices at
* Pricing near bottom bodes ill for upcoming offerings
* PICC Group to debut on Dec. 7 in Hong Kong
(Adds IPO market details, comments, PICC cornerstones)
By Elzio Barreto and Fiona Lau
HONG KONG, Nov 30 Chinese state-owned insurer
PICC Group raised $3.1 billion in Hong Kong's biggest
initial public offering in two years after pricing the deal near
the bottom of an indicative range, the latest sign of a tepid
appetite for new listings in much of Asia.
The muted result sets the stage for the few small deals
still waiting to hit the Hong Kong market in the fourth quarter,
which is usually the busiest time of year for equity offerings.
It comes even as PICC secured commitments from cornerstone
investors for more than half of the IPO and hired a record
number of underwriters to help get the deal done.
Upcoming offerings include an up to $200 million listing by
natural gas producer AAG Energy, a $300 million IPO by
engineering company Wison Group and a $150 million listing from
thermal and coking coal miner Century Energy.
The PICC deal priced after a massive drop in IPO volumes in
Hong Kong and a downturn in other major markets in Asia Pacific,
including mainland China and Singapore, on concerns over
Europe's sovereign debt crisis and China's economy.
"In addition to the overseas markets in Europe, investors
may also be worried about a slowdown in China's economy, so
there are several concerns on the macro front," said Olive Xia,
an insurance analyst at Core Pacific Yamaichi in Shanghai.
"Other insurance companies also tried to raise funds via
share placements or convertible bonds or sub debt issuance, but
the market demand is relatively weak or sensitive to the price,"
People's Insurance Company (Group) of China (PICC), as the
company is formally called, priced the IPO at HK$3.48 per share,
near the bottom of an indicative range, according to sources
with direct knowledge of the matter.
The company offered 6.9 billion new shares, putting the
total deal at HK$24 billion ($3.1 billion). It had marketed the
offering at an indicative range of HK$3.42-HK$4.03 per share.
IPO BIGGEST IN TWO YEARS
The IPO is the biggest in Hong Kong since the $20.5 billion
listing of AIA Group Ltd in October 2010. It is also
the largest in Asia, outside Japan, since plantation company
Felda Global Ventures Holdings Bhd's $3.3 billion
offering in June.
Hong Kong led the world in IPO issuance in 2009 and 2010,
but new stock offerings have dwindled and volumes are down by
about 63 percent so far this year, including the PICC Group IPO,
according to Thomson Reuters data.
Most deals in 2012 have been so-called block offerings,
which target a select number of institutional investors and seek
to bypass volatile demand from retail investors.
Across the region, only the Southeast Asian markets of
Malaysia, Philippines and Thailand have had a strong surge in
IPO issuance, with volumes down more than 60 percent in China
and South Korea and 40 percent in Singapore.
PICC secured commitments from cornerstone investors for
about $1.8 billion worth of stock offered in the IPO, easing
concerns it may not find enough demand for the deal.
Major investors included U.S. insurer American International
Group (AIG), China utility State Grid Corp,
China's leading gold miner Zijin Mining Group and
China Life Insurance .
Cornerstones back many Asian listings, committing to buy
large, guaranteed stakes and agreeing to a lock-up period during
which they will not sell their shares.
PICC is slated to debut on the Hong Kong stock exchange on
China International Capital Corp (CICC), Credit Suisse Group
AG, Goldman Sachs Group Inc and HSBC Holdings
Plc acted as sponsors of the IPO.
The record list of 17 banks helping to underwrite the deal
includes Bank of America Merrill Lynch, Morgan Stanley
and UBS AG, as well Chinese firms such as ABC
International and BOC International.
($1 = 7.7500 Hong Kong dollars)
(Reporting by Fiona Lau of IFR and Elzio Barreto; Additional
reporting by Jing Song of IFR; Editing by Richard Pullin and