Biotech Firm InnoCare Delays Hong Kong IPO Step on Virus Fears

03 Feb 2020, 05:44 PM IST

(Bloomberg) -- The world’s top initial public offering market has seen the impact of the novel coronavirus outbreak as a Chinese biotech firm decided to postpone investor meetings for its Hong Kong listing.

InnoCare Pharma Ltd., which develops treatments for cancer and autoimmune diseases, held off its plans to start gauging demand this week because of the widening virus epidemic, according to people familiar with the matter, who asked not to be identified as the information is private. The company had been planning to raise around $200 million from the IPO, the people said. A representative for Innocare declined to comment.

The decision, which could potentially delay the share sale, does not bode well for other companies sitting in the pipeline in Hong Kong. The Asia financial hub was the world’s top listing venue last year with more than $40 billion raised, thanks to the mega share sale by Alibaba Holdings Group Ltd. A number of high profile names including Yum China Holdings Inc. and Mongolia’s state-owned coal miner Erdenes Tavan Tolgoi JSC. are expected to launch later this year.

The epidemic even has the potential to disrupt IPOs across Asia as scores of flights, particularly to and from China, have been canceled. The disease’s incubation period of around 14 days has caused banks to ask employees to work from home for two weeks if they’ve just visited mainland China. These have made meetings between bankers, investors and company executives difficult.

Chinese firms accounted for 66% of the total $101.8 billion that was raised in listings in Asia last year, according to data compiled by Bloomberg. Singapore’s second-largest taxi company has also halted work on its second attempt to list because of the virus.

The market sentiment doesn’t help either as stocks have been pummeled by concerns about the potential economic damage. Hong Kong’s benchmark Hang Seng Index has dropped almost 6% after the Lunar New Year holiday. Trading in China is set to resume on Monday.

As travel restrictions into China have put deal discussions on hold, dealmakers are extending their holidays with some busy stocking up on masks and hand disinfectants. A senior banker at a European bank said he’s going to stay overseas for longer as he could work from anywhere with a laptop and a phone.

Mergers and acquisitions that involved Hong Kong and China companies have seen their slowest start since 2013, partly due to an earlier Lunar New Year. Transaction value stood at $21 billion in January, less than half of the $48 billion for the same period last year, according to data compiled by Bloomberg.

To contact the reporters on this story: Julia Fioretti in Hong Kong at jfioretti4@bloomberg.net;Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editors responsible for this story: Fion Li at fli59@bloomberg.net;Lianting Tu at ltu4@bloomberg.net