China's state-owned insurer PICC Group has secured approval from the Hong Kong stock exchange for a planned initial public offering of up to $3 billion, though volatile markets mean a sale is unlikely to take place anytime soon, a source with direct knowledge of the matter said.

PICC is planning to raise as much as $6 billion through a dual listing in Hong Kong and Shanghai, sources previously told Reuters. If successful, the combined fund raising could potentially be Asia's biggest offering, ahead of Malaysian plantation operator Felda Global Ventures Holdings' $3.1 billion deal.

PICC, formally known as People's Insurance Company of China Group, will join other Chinese banks and insurers looking to raise funds to bolster their balance sheets and meet regulatory requirements on capital adequacy ratios.

The Hong Kong stock exchange approval paves the way for PICC, one of China's largest insurers, to launch its offer as early as next week.

But PICC, the parent of China's largest property insurer PICC Property & Casualty Co, is in no hurry to launch the offer next week given the difficult market conditions, said the source, declining to be identified because the information was confidential.

Calls to PICC in Beijing were not answered because of a national holiday in China.

Last month, PICC added 14 more banks including Goldman Sachs, Morgan Stanley, and UBS to help underwrite the Hong Kong tranche of the IPO, taking the total number of banks that may end up working on the offer to a record 17.

The IPO would help PICC raise funds and inject capital into Hong Kong-listed PICC Property & Casualty to improve the unit's capital adequacy and solvency ratios, ratings agency Moody's Investors Service said in a report earlier this year.

The benchmark Hang Seng index is down about 12 percent since reaching a peak for the year in late February, while the index of financial services firms .HSHFI has tumbled 17.5 percent over the same period.

Plunging global equity markets have slowed IPOs and stock offerings in the region, with volumes in Asia ex-Japan down 47.5 percent in 2012 through mid-June to $67.8 billion, according to Thomson Reuters data.

In Hong Kong alone, IPOs have had their slowest start in about four years with deal volumes 85 percent lower in the first five months of the year.

(Reporting by Elzio Barreto; Editing by Muralikumar Anantharaman and Ryan Woo)

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