Hong Kong’s IPO market in the current year has witnessed a shifting landscape, marked by a series of significant developments. Despite facing challenges stemming from global economic uncertainties and regulatory changes, Hong Kong remains a prominent hub for companies seeking to go public.
A biotech firm and a logistics service provider initiated the start of six Hong Kong stock market debuts this week, aiming to raise a combined HK$3.58 billion (US$458 million). However, Hong Kong’s performance as a listing platform has been disappointing compared to previous years.
On Monday, Wuhan YZY Biopharma priced its shares at HK$16, at the lower end of its target range, raising HK$172 million, and LC Logistics raised HK$149 million with shares priced at HK$5.13, which closed at HK$5.10 after dropping by as much as 4.9 percent.
The city’s fundraising activities have reached their lowest levels in over a decade due to economic challenges in China and other regions, coupled with high interest rates, as highlighted in a recent report by Deloitte China. Deloitte estimates that IPOs in Hong Kong will decline by 14 percent in deal volume and 61 percent in value during the first three quarters of the year compared to the same period in 2022. They anticipate a total of 44 IPOs to raise an estimated HK$24.7 billion, in contrast to 51 deals that raised HK$64 billion during the same period last year.
Tencent-backed car services platform Tuhu is set to go public on Tuesday, seeking to raise approximately HK$1.08 billion by offering 814 million shares. The company has priced its shares at HK$28, which falls at the lower end of its intended price range, as reported in a filing with the stock exchange on Monday.
The deal is being jointly sponsored by Bank of America Securities, Goldman Sachs, CICC, and UBS. Furthermore, five cornerstone investors, including Zhejiang Leapmotor, Gotion High Tech, Image Frame Investment, Castrol Holdings International, and Shanghai Zizhu High-tech Zone, have already committed to purchasing 66 percent of the stock, equivalent to 28 million shares.
The proceeds from the offering will be used for various purposes, including improving the supply chain, funding research and development efforts, expanding the company’s storage network, and general investments.
On Thursday, Beijing Fourth Paradigm, an artificial intelligence software company, intends to raise up to HK$1.1 billion by offering 18.4 million shares within a price range of HK$55.60 to HK$61.16 per share, as indicated in its regulatory filings. Notably, three cornerstone investors, led by New China Capital Management, have committed to purchasing approximately US$96.8 million worth of stock, representing 70.6 percent of the total offering.
Additionally, two other software companies are set to make their debut on Thursday. Neusoft Xikang, a Chinese cloud hospital platform, aims to raise US$101 million by selling 133.8 million shares at a price of HK$5.91 per share, as per regulatory filings. Meanwhile, ZX, a mobile games operator, plans to sell 18.97 million shares at a maximum price of HK$14 each, with the goal of raising up to US$34 million, as outlined in its prospectus.
In the coming weeks, Tian Tu Capital is preparing to launch an initial public offering, intending to sell approximately 173.3 million shares at a price range spanning from HK$5.80 to HK$11.40 per share, as detailed in an exchange filing issued on Monday. The company is aiming to secure up to HK$1.98 billion when it makes its debut on October 6, with Huatai Financial and BOCI Asia serving as joint sponsors for the offering.
(Source: Mia Castagnone | South China Morning Post)
