October 18, 2010 / 8:47 AM / 7 years ago

AIA to shut IPO book early on strong demand: sources

<p>The sign of the AIA central is seen at its entrance Hong Kong's financial district September 21,2010.Tyrone Siu</p>

HONG KONG (Reuters) - Heavy demand for AIA Group Ltd's up to $20.5 billion share sale in Hong Kong prompted underwriters to shut the offer to funds two days ahead of schedule, sources said on Monday.

The strong interest from traditional funds and high-profile Chinese investors in the sale of the unit of American International Group Inc (AIG.N) comes amid a flood of Asian IPOs that have cemented the region's dominance in initial public offerings this year.

AIA's books will now close on Tuesday, U.S. time, as the underwriters and executives wrap up meetings with institutional investors in Chicago, Boston and New York, three sources with direct knowledge of the matter told Reuters.

China Investment Corp CIC.UL, the $300 billion China state sovereign wealth fund, and Chinese corporates such as China Life Insurance Co (2628.HK), are among the investors queuing for the offer, they added.

One source said that CIC was interested in buying up to $200 million worth of shares in AIA. CIC could not be reached for a comment. AIA declined to comment.

GLOBAL FUNDS FLOW EAST

Globally investors seeking better yields and cashed-up domestic institutions have piled on big Asian share deals this year, seeking to tap the region's resilient economic growth.

Robust foreign fund inflows have also fueled strong rally in region's stock markets, driving many to multi-year highs, encouraging issuers from India to Malaysia to launch record deals.

Coal India Ltd, the nation's largest ever IPO, was subscribed about a third on day one, and Global Logistic Properties (GLPL.SI), Singapore's second-biggest IPO surged as much 12 percent on its debut, all pointing to hyper demand for any Asia play.

"Strong growth prospects in the region has made many IPOs in the region appealing. We cannot find anything like that such as in the U.S. at the moment," said Alex Wong, a director at Ample Finance Group.

In the first three quarters of this year, Asian IPOs raised $97 billion, according to data compiled by Thomson Reuters, more than double the combined total from the United States, Europe, the Middle East and Africa.

An IPO boom is good news for underwriters and banks in Asia have earned about $2.3 billion in underwriting commissions, data from Thomson Reuters/Freeman Consulting shows, compared with $955 million earned last year.

State-run Coal India's $3.5 billion expected to generate strong demand.

GLP, which owns industrial and logistic properties in China and Japan, is the first listing of a firm majority-owned by the Government of Singapore Investment Corp (GIC) GIC.UL, one of the world's biggest sovereign wealth funds with assets of more than $200 billion.

VERY STRONG RESPONSE

AIA CEO Mark Tucker said on Sunday that the IPO has generated an "incredibly enthusiastic response," without elaborating the size of the demand.

AIG is likely to price the offer at HK$19.14 per share, a Reuters poll showed last week, above the midpoint range of the marketing range. AIA is on course to be the world's third-biggest IPO, if priced at the top end and if AIG exercises the over-allotment and the upsize options.

News of the institutional demand came on the opening day of AIA's retail offering, where the public is able to register for shares before the stock debuts.

There did not appear to be long lines outside local bank branches in anticipation of the offering. A rush to branches can provide an early indication of strong retail demand, as has been the case with past Hong Kong mega-IPOs.

Online media in Hong Kong on Monday reported that banks are offering record low interest rates for margin loans to invest in the AIA IPO.

Among other Chinese institutions lining up for the AIA offer are Ping An Insurance (2318.HK) and Taikang, another Chinese life company, one source said on Monday.

The sources declined to be named because they were not authorized to speak to the media.

Additional reporting by Donny Kwok; Editing by Muralikumar Anantharaman and Lincoln Feast

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