China Life IPO Shares Oversubscribed 10 Times
The shares of China Life, China's leading state-owned
life insurance company, which is due to go public this
month in New York and Hong Kong, are oversubscribed 10
times. The initial offering is for up to US$3 billion
in the two exchanges. There has been strong demand in
Hong Kong for the shares of the company from Hong Kong
retail investors. The company did not expect such strong
demand from retail investors, since they will only receive
up to 20 percent of the offering.
Last week, three of Hong Kong's richest tycoons revealed
that they would buy up to US$500 million of the shares
of the company. This could prompt the company to raise
the US$3 billion amount of the listing. It is believed
that strong demand for the company's shares are being
driven by additional demand coming from Asian and international
fund managers, and large hedge funds.
China Life, which controls 45 per cent of China's life
insurance market, said it would raise HK$17.5 billion
- $23.6 billion after setting a price range of HK$2.98
- 3.65 per share. The final offering price will be decided
on the evening of Dec. 11 by China Life and its advisers,
Credit Suisse First Boston, Citigroup, Deutsche Bank and
Chinese firm CICC. Hong Kong residents have until the
evening of Dec. 11, local time, to apply to purchase the
shares of the company.
Yesterday, Great Wall, a Chinese vehicle maker, raised
HK$1.5 billion in an offering in which demand from retail
investors outstripped supply by more than 680 times.
Hong Kong's retail investors have traditionally been
speculative buyers, and rumor serves to drive many investment
decisions. Hong Kong's newspapers are particularly sensitive
to rumors of investments made by Li Ka-shing, the territory's
leading business tycoon. Until recently, his investments
were all seen as winners.
The demand seen now is reminiscent of the demand seen
in early 2000, during the Internet bubble. Of course,
the buyers do not see it as a repeat of that episode,
when so many lost money after that market crashed, throwing
Hong Kong's economy into a prolonged recession.
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