Chinese state-owned insurer PICC Group has secured pledges from American International Group (AIG) and other investors to buy about half of its up to $3.6 billion IPO, set to be the biggest in Hong Kong in two years.

The long-awaited offering is set to be priced on Nov. 30. Underwriters have revised down the company valuation and the IPO size, sources with direct knowledge of the deal said, underscoring the tough environment for fundraising and PICC’s need to boost its capital base to support business growth.

People’s Insurance Company (Group) of China (PICC), one of China’s largest insurers, is tapping the Hong Kong equity market at a time when IPO volumes in the financial center have tumbled more than 80 percent. PICC will be the biggest Hong Kong IPO since another insurer, AIA Group Ltd, raised $20.5 billion in 2010.

The company secured $1.85 billion in commitments from 17 cornerstone investors as varied as Chinese utility State Grid Corp, the country’s leading gold miner Zijin Mining Group, defense contractor Spacechina and China Life Insurance Co Ltd , the sources said.

So-called cornerstone investments in IPOs are unique to Asia, where large and well-established investors are guaranteed big allotments in return for holding their shares for a certain period of time, giving investors confidence in the deal.

U.S. insurer AIG was added to the list of cornerstone investors who initially signed up, pledging $500 million to the IPO, sources said. It was unclear what caused the delay, but one source had earlier said AIG had dropped out due to valuation issues. AIG was not immediately available for comment.

The list is still subject to last minute changes, sources said.

“The seller (PICC) is pushing the envelope on valuations,” one of the sources added.

French reinsurer SCOR and Tokio Marine Holdings are among the global companies who have committed to buy PICC shares. SCOR could not be reached immediately for comment. A Tokio Marine spokesman declined to comment.

The price range for the IPO was set at HK$3.43-HK$4.03 per share, valuing PICC at 96 billion yuan to 113.2 billion yuan ($15.4 billion to $18.2 billion) before the IPO, Thomson Reuters publication IFR reported, citing four sources familiar with the matter.

That is lower than the 130 billion yuan [$20.857 billion] valuation initially sought, IFR added. PICC is offering 6.9 billion primary shares, or 16.7 percent of its enlarged capital, aiming to raise 19.18 billion yuan to 22.6 billion yuan [$3.077 to $3.626 billion].

A record 17 banks have been roped in to sell the offer, which is being marketed to global institutions.

IFR previously reported the IPO had been expected to value PICC at $20.8 billion to $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, according to pre-deal research reports.

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

PICC’s listing comes at a time when the volume of new offerings in Hong Kong has plunged, with IPO activity likely to shrink to its lowest since 2008 as investors shun new deals due to volatility caused by Europe’s debt troubles.

Overall issuance in the city is little changed so far in 2012 from 2011 at about $38 billion, but the year has been a dismal one for IPOs, down more than 80 percent, according to Thomson Reuters data.

Most of the activity has been from so-called block deals that target institutional investors, including a $6 billion offering of AIA stock in March and a $2.5 billion sale of Industrial and Commercial Bank of China shares in April.

PICC and companies including Future Land Development Holdings Ltd will test investors’ appetite for IPOs in coming weeks with nearly $5.2 billion of deals.

Founded in 1949, PICC is China’s first nationwide insurer and has 2.42 million institutional insurance clients and about 130 million individual insurance customers, more than the entire population of Japan.

The company is controlled by China’s Ministry of Finance, which has an 88.7 percent stake, while the National Social Security Fund holds the remainder.

China International Capital Corp (CICC), Credit Suisse Group AG, Goldman Sachs Group Inc and HSBC Holdings Plc won mandates as sponsors of the deal.

The list of banks also helping to underwrite the IPO includes Bank of America Merrill Lynch, Morgan Stanley and UBS AG, as well Chinese firms such as ABC International and BOC International.