Subscription Value Exceeds Last Year’s Total as Insurance Capital Intensifies Participation in Hong Kong IPOs

Since the start of the year, Hong Kong’s IPO market has attracted notable participation from insurance investors, who have become an increasingly influential presence. According to Jiemian News statistics, by October 14 seven insurance institutions acted as cornerstone investors in seven Hong Kong IPO placements, collectively subscribing approximately HK$29.32 billion, a sum that surpasses the entire subscription amount recorded for last year.

Insurance firms such as Taikang Insurance, China Pacific Insurance, Dajia Life Insurance and China Post Life Insurance have appeared repeatedly among recent IPO cornerstone lineups, deploying capital across sectors that include gold extraction, LiDAR technology, new energy vehicles and appliance components. Waison International Capital CEO Wong Lap-chung told Jiemian News that insurers’ selection criteria for IPO participation emphasize stability, with particular focus on three certainties: cash flow quality, market position and corporate governance. Projects favored by insurance investors generally feature robust audit processes, clearly defined controlling shareholders, limited foreign ownership and valuations within quantifiable ranges, often with price‑to‑earnings ratios typically below 20.

Wind data indicate that the aggregate cornerstone subscriptions by insurance institutions this year amount to about HK$29.32 billion, a material increase compared with under HK$10 billion for the same measure in the prior year. Market participants attribute this surge to policy encouragement for long‑term capital inflows and to a macro environment of declining long‑term rates that is incentivizing insurers to raise equity allocations to better match liability costs, making IPO placements an attractive avenue for higher‑yield assets.

Taikang Insurance and its subsidiaries have been particularly active, participating in placements for Zijin Gold International（02259.HK）, Hesai‑W（02525.HK）, Fengchao Technology（688279.SH）, Sanhua Intelligent Controls（02050.HK）and CATL（03750.HK）, with total commitments exceeding HK$1.4 billion and representing roughly half of insurance capital deployed in Hong Kong IPOs this year. China Pacific Insurance and its affiliates concentrated capital on Zijin Gold International and CATL, subscribing about HK$468 million and HK$388 million respectively.

Zijin Gold International’s IPO stood out as the second‑largest Hong Kong listing by fundraising this year and the largest A‑share spin‑off in history, drawing dozens of cornerstone investors including major insurers and global asset managers such as BlackRock and Schroders. Dajia Life Insurance and China Post Life Insurance targeted their placements in Chery Automobile（09973.HK）and AUX Electric（02580.HK）, subscribing approximately HK$257 million and HK$392 million respectively.

Industry practitioners explain that insurers’ active stance reflects a confluence of asset allocation needs, market valuation dynamics and supportive policy signals. In an environment characterized by limited high‑quality domestic asset supply, Hong Kong’s market concentrates scarce targets in China’s new economy, while relative valuation discounts versus A‑shares enhance the appeal of Hong Kong listings. Between January and September, Hong Kong IPO fundraising reached about HK$182.9 billion, ranking first globally and rising roughly 229% year‑on‑year; the average number of cornerstone investors per deal has increased materially, and some listings have delivered strong first‑day returns, reinforcing expectations that IPO participation can realize tangible gains.

Analysis of insurance capital’s sector preferences shows a tilt toward hard technology and green sectors, with materials, discretionary consumption and information technology receiving significant allocation. Insurers typically prioritize companies that align with national strategic priorities and exhibit durable competitive positions, subject to rigorous valuation screening and due diligence on sponsors and cornerstone investor composition to control investment uncertainty. Observers note that examples this year include investments in new energy and technology leaders as well as resource and consumer names, signaling insurers’ use of Hong Kong IPOs to deploy long‑duration, patient capital.

Despite many cornerstone placements producing immediate paper gains on listing, insurers face multiple risk exposures. Market volatility can lead to post‑issue price weakness, and typical lock‑up periods of six to twelve months create liquidity constraints and timing risk. Fundamental risks, such as subsequent underperformance relative to forecasts, and macro risks including global economic shifts, interest rate and currency volatility, and regulatory changes, also merit attention. Insurance investors must additionally manage lock‑up timing, pricing and absorption risks; a weakening secondary market before lock‑up expiry can generate mark‑to‑market losses and potential selling pressure once shares become tradable. Issuer‑specific governance and compliance issues—earnings shortfalls, customer concentration, related‑party transactions, controlling‑shareholder pledges and red‑chip or VIE structures—can amplify valuation reappraisals and volatility.

Capital‑matching and currency considerations further complicate allocations. Delays in listings, insufficient clawbacks or unexercised overallotment mechanisms can create asset‑liability mismatches, while rising Hong Kong dollar interest rates, exchange rate swings and cross‑border settlement frictions may erode real returns denominated in Hong Kong dollars. Industry sources summarize these exposures as forms of mismatch: duration mismatch, risk‑return mismatch and liquidity mismatch, all of which require careful management when deploying predominantly long‑term insurance capital into IPO placements.