AIA sets price range for Hong Kong IPO

AIA Group Ltd, which is aiming to raise up to $20.5 billion through a Hong Kong listing, said it had set a price range of HK$18.38-19.68 per share in an IPO on course to be the third-biggest ever.

It said the base offering would comprise of 5.86 billion shares and that up to 8.08 billion shares, including the "greenshoe" over-allotment option, may be offered.

"With the global offering, AIA will become the only independent, listed life insurance group exclusively focused on the Asian growth opportunity - the first of its kind in the life insurance sector," a statement from AIA said quoting CEO Mark Tucker.

The offering will also help bailed-out insurer American International Group Inc to pay back part of the aid it received from US government during the financial crisis.

AIG could end up with about a 33 per cent stake in AIA if it decides to exercise the upsize option and greenshoe component of the IPO. The IPO will be priced on October 21 and the listing is scheduled for October 29.

AIG is likely to price the IPO at HK$19.14 per share, a Reuters poll released last week showed. At the top end of the pricing range, AIA will have an equity value of $30.5bn.

AIA's unique position as the only the listed life insurer with a wide footprint in the rapidly growing Asia Pacific region is a big draw for investors, fund managers said.

"The life insurance market potential in Asia is unequalled. There is enormous headroom for profitable growth in all our markets and we have a very clear strategy to unleash the potential of AIA which we believe will deliver exceptional value to our shareholders," the statement said, quoting Tucker.

AIA's large size means that it will have a meaningful weighting in the benchmark Hong Kong stock index, creating additional demand from fund managers who track the index.

AIA traces its roots in Asia to 1919 when Cornelius Vander Starr, a young American entrepreneur, established a fire and marine insurance agency Shanghai. It has more than 23 million in-force policies and a brand widely recognised in Hong Kong.

Citigroup Inc, Deutsche Bank AG, Goldman Sachs Group Inc and Morgan Stanley are the joint global coordinators.