HONG KONG - China's PICC Group is in talks with American International Group Inc and others, and expects them become cornerstone investors for PICC's planned listing worth up to $4 billion, in what will be Hong Kong's biggest initial public offering?in two years.

State-owned insurer PICC started meeting institutional investors in Hong Kong on Thursday to gauge demand for the IPO, braving a slump this year in equity deals.

People's Insurance Company of China Group, one of the country's largest insurers, is also holding discussions with French reinsurer Scor, China Life Insurance Co Ltd and Chinese state utility State Grid Corp among others for cornerstone stakes, Reuters reported.

PICC will offer 6.9 billion new shares in the IPO, equivalent to a 16.7 percent stake in the enlarged company, said a source with direct knowledge of the plans who was not authorized to speak publicly on the matter and declined to be named.

About 50 percent of the IPO is covered by commitments from cornerstone investors, including financial institutions, Chinese corporates and other strategic investors, sources with direct knowledge of the plans said.

Cornerstone investments in IPOs, unique to Asia, aim to bolster confidence in an offer with commitments by established investors and institutions to buy large, fixed stakes that they agree not to sell until the end of an established lock-up period.

The IPO values the company between $20.8 billion and $30.5 billion, or at 2-2.5 times the 2013 price to book value and at a 2013 price to earnings ratio of 10.5-15, said the pre-deal research reports.

Asian insurers on average trade at 15.9 times forward price to earnings, Reuters data shows.

PICC's planned IPO comes at a time when issuance in Hong Kong has plunged more than 80 percent so far this year, with volumes likely to shrink to their lowest since 2008 as investors shun new deals due to volatility caused by Europe's debt troubles.