PICC gears up for Hong Kong IPO (2)

PICC Life and PICC Health are the most in need of new capital, according to Moody's. By the end of June, the two subsidiaries' solvency margin ratios were 136 percent and 101 percent respectively, just barely above the regulatory minimum of 100 percent.

Apart from strengthening the subsidiaries' capitalization, the IPO would reduce PICC Group's government ownership to around 83.3 percent from 100 percent, which would help the group to improve its corporate governance and transparency, and represents the government's willingness to play a less dominant role in the industry, Moody's said.

PICC Group's IPO has been delayed several times since early this year because of a volatile capital market.

To improve its chance of success this time, the company has reportedly cut the size of the IPO from $6 billion and dropped its plan to list in Shanghai because it is more difficult to obtain regulatory approvals from the mainland.

PICC Group is currently 88.7 percent owned by the Ministry of Finance, and 11.3 percent owned by the Social Security Fund, a government investment arm and supplementary pension scheme.

The company reserved about $1.8 billion worth of shares for 17 cornerstone investors including AIG, which committed to buying $500 million worth of subscription shares, according to PICC Group's prospectus.

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