(Yicai Global) Oct. 23 -- People's Insurance Corp. of China, the country's biggest property insurer and better known as PICC, has slashed its first-time mainland listing by another fifth as the Chinese stock markets wilt in the face of potential forced share sales.
The Beijing-based firm will cap the issuance at 1.8 billion shares, it said in a filing to the Hong Kong Stock Exchange yesterday. At the end of last month, the China Securities Regulatory Commission greenlit the company to issue as many as 2.3 billion. The insurer had earlier indicated it would issue up to 4.6 billion shares.
PICC also resumed trading yesterday after suspending share sales on Oct. 19.
China's stock markets have crumpled this year, with the Shanghai Composite Index sinking to 2,487.81 on Oct. 18, a new low since November 2014, and the Shenzhen Component Index meet a similar fate as it shrunk to 7,192.21 -- its lowest value since May 2014. The ChiNext index, which tracks Shenzhen's board for fast-growing small enterprises, also hit a five-year low.
All but 201 of China's 3,553 companies listed on the main boards of Shanghai and Shenzhen have pledged out shares in order to borrow cash, and the falling stock prices are pushing them past the tipping point that forces share liquidation. If that happens, the markets are expected to crash further -- and the company's top financial figureheads, including central bank head Yi Gang and cabinet Vice Premier Liu He, recently spoke out in an effort to reassure investors that the associated risks were under control.
PICC's net value per share was CNY3.43 (USD0.5) as of June 30, according to its price-to-book ratio, so the sale of 1.8 billion shares could raise CNY6 billion (USD880 million) for the firm.
Even after cutting the number of shares it will issue, it still plans to offer more than the four largest Chinese insurers already on the mainland stock markets. China Life issued 1.5 billion shares, Ping An Insurance 1.15 billion, China Pacific Insurance 1 billion and New China Life Insurance 159 million.
Editor: James Boynton