The Asian unit of troubled US insurer AIG looked set to record the world’s second-largest initial public offering this year, in a monster share sale that could still top $20 billion.
AIA said that it had raised $17.8 billion after pricing its shares at 19.68 Hong Kong dollars ($2.53) ahead of the insurer’s debut on the Hong Kong stock exchange next week.
Frenzied investor demand has already made the IPO Hong Kong’s largest ever share sale while the total amount raised could rise if other options are exercised.
Agricultural Bank of China in July raised a total of $22.1 billion from its IPO, exceeding the previous world record set by the Industrial and Commercial Bank of China, which raised $21.9 billion in 2006.
However, Agbank’s IPO was split with it raising $12 billion in Hong Kong and the rest in Shanghai.
Shares in AIA’s highly-anticipated offering were priced at almost 16 times forecast earnings this year, Dow Jones Newswires cited an unnamed source as saying.
“The IPO is a critical turning point for AIA and we are delighted that it has been so positively received by investors around the world,” Mark Tucker, AIA’s chief executive, said in a statement.
AIA said it would initially offer 5.86 billion shares at between 18.38 and 19.68 Hong Kong dollars, adding that it could issue additional shares if it exercised a so-called greenshoe option.
That may bring the total raised to around $20.5 billion and leave AIG with a stake of just 32.9 per cent in the firm.
AIG, which is on the hook to repay US taxpayers after a government bailout in 2008, won approval last month for the sale.
The US insurer was forced to look at publicly floating AIA in Hong Kong after the collapse in June of a proposed $35.5 billion sale to the British insurer Prudential.
AIA’s reach across 15 Asian countries and its healthy balance sheet explained the strong investor demand, said Francis Lun, general manager of Hong Kong’s Fulbright Securities.
The firm booked a net profit of $1.75 billion in 2009.
“The listing should do well because of the strong investor demand (for AIA shares),” Mr Lun said, adding that “AIA is a good company and insurance is always a very strong cash flow business”.