Tags: Fund | AIA | IPO | Close | Strong | Demand.AIG | asia

Fund Orders for AIG's Asian IPO to Close Early on Strong Demand

Monday, 18 Oct 2010 08:30 AM

American International Group Inc. is set to close the institutional book for the $15 billion AIA Group IPO two days ahead of plan, amid signs the IPO has been swamped by orders from traditional funds and high-profile Chinese investors.

A surge of major IPOs have hit the Asian markets in the past month, with issuers from India to Malaysia launching record IPOs, riding a boom in equity markets driven by foreign fund inflows seeking to tap the region's resilient economic growth.

In the first three quarters of this year, Asian IPOs raised more than $90 billion, according to data compiled by Thomson Reuters, more than double the combined total from the United States, Europe, the Middle East and Africa.

Heavy demand for the AIA IPO is prompting underwriters to close the offer 48 hours ahead of the planned close, sources with direct knowledge of the matter told Reuters. The books will now close on Tuesday, U.S. time, as the underwriters and executives wrap up meetings with institutional investors in Chicago, Boston and New York.

China Investment Corp., the $300 billion China state sovereign wealth fund, and Chinese corporates such as China Life Insurance Co., are among the investors queuing for the offer, they added.

One source said that CIC was interested in buying up to $200 million worth of shares in AIA. CIC could not be reached for a comment. AIA declined to comment.

"AIA's IPO is getting strong demand from institutional investors thanks to a strong market momentum and liquidity," said William Lo, an analyst with Ample Finance.

AIA is very likely to join the benchmark Hong Kong index (.HSI), which will force the big funds to buy the stock, Lo added.

VERY STRONG RESPONSE

AIA CEO Mark Tucker said on Sunday that the IPO has generated an "incredibly enthusiastic response," without elaborating the size of the demand.
AIG is likely to price the offer at HK$19.14 per share, a Reuters poll showed last week, above the midpoint range of the marketing range. AIA is on course to be the world's third-biggest IPO, if priced at the top end and if AIG exercises the over-allotment and the upsize options.

News of the institutional demand came on the opening day of AIA's retail offering, where the public is able to register for shares before the stock debuts.

There did not appear to be long lines outside local bank branches in anticipation of the offering. A rush to branches can provide an early indication of strong retail demand, as has been the case with past Hong Kong mega-IPOs.

Online media in Hong Kong on Monday reported that banks are offering record low interest rates for margin loans to invest in the AIA IPO.

Among other Chinese institutions lining up for the AIA offer are Ping An Insurance and Taikang, another Chinese life company, one source said on Monday.

The sources declined to be named because they were not authorized to speak to the media.

© 2017 Thomson/Reuters. All rights reserved.

   
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American International Group Inc. is set to close the institutional book for the $15 billion AIA Group IPO two days ahead of plan, amid signs the IPO has been swamped by orders from traditional funds and high-profile Chinese investors. A surge of major IPOs have hit the...
Fund,AIA,IPO,Close,Strong,Demand.AIG,asia
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2010-30-18
Monday, 18 Oct 2010 08:30 AM
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