Ping An's OneConnect leaning towards New York over Hong Kong for IPO - sources

HONG KONG (Reuters) - Ping An Insurance’s OneConnect financial technology unit is leaning toward picking New York over Hong Kong for its initial public offering (IPO) in the hope of achieving a higher valuation, three people with direct knowledge of the matter said.

Ping An Insurance Group Co of China Ltd, China’s biggest insurer by market value, had been planning a Hong Kong IPO of the unit since the beginning of the year in a deal that could raise up to $1 billion.

The insurer is now seeking to list OneConnect in New York as early as in September, said one of the people, who were not authorised to speak to media and so declined to be identified.

Ping An declined to comment.

While Hong Kong took the global IPO crown last year for the most money raised in stock market flotation, its new listings were the worst performers versus those on other leading bourses.

Just six of the biggest 20 IPOs in Hong Kong that had begun trading in 2018 were above their offer prices a month after debut, according to Dealogic data, compared with 16 on the NYSE and 10 on Nasdaq.

“Given the tougher market conditions amid the Sino-U.S. trade tension, New York has probably become more attractive for many Asia-based issuers as it offers more mature markets with a more predictable listing pace and deeper pool of capital,” said one of the people.

“All these certainly help smooth the listing process and stabilise stock performance in public markets as long as the company can sell a good story to U.S. investors first.”

The move also comes as markets are jittery in Hong Kong. The benchmark Hang Seng Index declined 0.7% on Friday following Wednesday’s 1.7% fall, amid massive street protests over a planned extradition bill with mainland China.

The city’s leader, Carrie Lam, on Saturday bowed to pressure and delayed the bill indefinitely.

The Hang Seng Index has gained about 5% so far this year, lagging a 15% rise in the U.S. S&P 500. Hong Kong’s exchange is also far behind the New York Stock Exchange and Nasdaq in raising capital via IPOs this year, with just $8.06 billion raised as of mid-June compared with a combined $28.2 billion raised by the U.S. exchanges, showed data from Refinitiv.

OneConnect, which provides technology solutions to small and medium-sized financial institutions, raised $750 million in its maiden funding round in 2018, valuing it at $7.5 billion. It counts Japan’s SoftBank Corp among its main investors.

Reuters previously reported the company was targeting a valuation of about $8 billion and selected JPMorgan, Goldman Sachs and Morgan Stanley to work on its Hong Kong IPO.

Reporting by Clare Jim and Julie Zhu; Editing by Christopher Cushing