September 18, 2017 / 10:48 AM / a month ago

Institutional portion of ZhongAn's HK IPO oversubscribed: sources

HONG KONG (Reuters) - ZhongAn Online Property and Casualty Insurance Co, China’s first internet-only insurer, has covered the institutional tranche of its up to $1.5 billion initial public offering (IPO) multiple times over, sources close to the deal said on Monday.

Expectations that the stock could be added to the “Stock Connect” scheme in October is also boosting retail demand for ZhongAn, said one of the sources, none of whom could be named because details of the IPO demand have yet to be made public.

Stock Connect allows non-Chinese investors to buy mainland-listed shares via Hong Kong and Chinese investors to buy Hong Kong-listed stocks via links with the Shenzhen and Shanghai exchanges.

Adding ZhongAn to the scheme would allow millions of retail investors in China to buy the stock, though the timing for possible approval is uncertain, the source said.

ZhongAn declined to comment on the institutional and retail demand for the IPO.

Retail investors have signed up for HK$10.2 billion ($1.3 billion) of margin loans at Hong Kong broker Phillip Securities, which helps small private investors to borrow funds to boost their orders in hopes of securing an allocation in IPOs.

That level of demand far surpasses the minimum of $76 million of shares ZhongAn has set aside for retail investors.

About 95 percent of the IPO is reserved for pension funds and other institutional investors. The retail tranche can go as high as 20 percent, or $304 million, if demand is greater than 100 times the number of shares on offer for that portion of the deal, the IPO prospectus says.

Reporting by Elzio Barreto and Julie Zhu; Editing by Muralikumar Anantharaman and David Goodman

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