IA's IPO is set to start on Tuesday, with shares expected to start trading on October 29. The issue is likely to be among the world's largest ever IPOs, and follows the record breaking July deal from the Agricultural Bank of China Ltd (HKSE:1288.HK - News; Shanghai:601288.SS - News), which raised $21.9 billion in Hong Kong and Shanghai.
AIA's planned listing comes after a takeover attempt by Prudential collapsed in May over price disagreements. Prudential later dropped the offer to $30.4 billion just before the bid failed, a target sources later cited as the likely top end of the IPO valuation range.
"Considering that some of the Chinese insurers are trading more than 2 times embedded value, I think AIA can get overall value north of $30 billion," said Sally Yim, vice president at Moody's Investors Service in Hong Kong and senior analyst who covers Asia-Pacific's insurance industry.
Prudential's initial $35.5 billion bid for AIA was pitched at 1.67 price to embedded value. Embedded value is a measure commonly used to gauge the value of insurance companies that includes the present value of future profits from long-term insurance contracts.
Ultimately, the IPO price and its valuation is determined by the company and its underwriters, who gauge the specific embedded value figure that mutual fund investors are comfortable with, hoping to find a number that encourages the best demand.
"AIA is operating in some of the more mature markets like Singapore and Hong Kong. They have a little bit of a 'China story', but not as much as the Chinese pure plays," Yim said.