According to two sources, the insurer has agreed to an underwriting commission of 2.5%. That means the banks on the deal will share a total fee of about US$90m, assuming PICC prices at the top end of its target price range.
The commission is an improvement on recent jumbo listings in Hong Kong, reversing a trend that has seen underwriting revenues fall across Asia’s equity capital markets.
The Hong Kong tranche of Agricultural Bank of China’s US$22.1bn A/H IPO in June 2010, the world’s largest IPO, paid an underwriting fee of 1.96%. AIA, which raised US$17.8bn through a Hong Kong IPO in October 2010, paid an underwriting fee of 1.75%, with an incentive fee of up to 0.25%. The US$1.85bn float of Haitong Securities in April – this year’s biggest Hong Kong listing so far – paid a 2% fee.
PICC, which starts taking orders from institutional investors today, is offering 6.9bn primary shares, or 16.7% of the enlarged capital, at an indicative price range of HK$3.42–$4.03 per share. The Chinese insurer plans to raise HK$23.6bn–$27.8bn. Pricing is slated for November 29.
While PICC’s total fee pool may be higher, however, it will also be divided between a higher number of banks. The insurer has named 13 bookrunners and a further four lead managers.
CICC, Credit Suisse, Goldman Sachs and HSBC are joint sponsors and, along with Deutsche Bank, joint global co-ordinators and joint bookrunners. Other joint bookrunners include ABC International, Bank of America Merrill Lynch, BOC International, CCB International, Daiwa, Essence Securities, ICBC International and JP Morgan.
Citigroup, Haitong International, Morgan Stanley and UBS are lead managers.
