Amid tense Sino-Japanese relations, the US$3.1 billion initial public offering of mainland insurer PICC Group is all the more remarkable in that it included a rare tranche solely targeted at Japanese investors.
While the exact allocation hasn't been disclosed, the equivalent of US$220 million is thought to have been allotted to them, the offer also said to have been well subscribed.
It's not unusual for multibillion-dollar IPOs in Hong Kong to include a so-called Japanese public offering without listing (Powl) - although the last sizeable ones probably date to the mega-deals of 2010, the flotations of Agricultural Bank of China and of fellow insurer AIA.
In the case of PICC, an industry sector that's well-represented in Japan, and the presence of Japanese insurer Tokio Marine as a US$50 million cornerstone investor, may have encouraged participation.
As the name suggests, a Powl is a mechanism that's used to gather demand from Japanese public investors, but without the added complexity of listing shares in Tokyo. And as is common with equity offerings there, orders are principally derived from retail and individuals with high net worth, rather than from institutions.
The process, however, somewhat lengthens the overall timetable for a deal and adds to the cost of an IPO. Documentation has to be filed in Japanese (not just at the time of the offering, but on an ongoing basis thereafter), and local auditors also must do work on the financials.
Importantly, and unlike public offers in Hong Kong, Powls are conducted only after the final offer price has been determined. That, for example, explains the unusually long wait for the start of trading in PICC Group's shares - December 7, following pricing on November 30.
