China IPO Stages Stellar Hong Kong Debut Amid Biotech Craze
China IPO Stages Stellar Hong Kong Debut Amid Biotech Craze
(Bloomberg) -- A Chinese medical devices provider surged 74% in its Hong Kong trading debut on Friday in the best opening performance this year for an initial public offering over $50 million.
Peijia Medical Ltd., which produces replacement heart valve and vascular repair devices, opened at HK$26.80 versus its offer price of HK$15.36. The company raised $302 million in its IPO and is the latest biotech firm to attract strong investor demand in the financial hub as the coronavirus pandemic spotlights inadequacies in China’s health-care system.
Investors have been piling into companies focusing on improving everything from cancer detection to drugs and online diagnosis. Peijia Medical got orders from retail investors for 1,184 times the amount of stock initially made available to them, triggering a reallocation mechanism that gives 50% of the deal to individual investors up from the initial 10%. That retail subscription is the highest for a biotech IPO in Hong Kong since the bourse changed its listing rules in 2018 to attract more firms from the sector, according to data compiled by Bloomberg.
“The strong response to the IPO also demonstrates the biotech sector’s resilience to the market uncertainty of recent months,” said Stanley Xie, Herbert Smith Freehills Kewei joint operation partner, who worked on the deal.
The same trend was seen with two other popular biotech listings this year, Akeso Inc and InnoCare Pharma Ltd. Both priced at the top of their ranges and had to reallocate shares to retail investors given the level of demand. They are now trading 58% and 66% above their offer prices, respectively.
In addition to being among the most popular IPOs in Hong Kong, biotech companies have also been the biggest. Three of the top five listings this year are by biotech companies, and more are lining up. Kintor Pharmaceutical Ltd., which develops cancer treatments, is due to price its offering of as much as $240 million later on Friday.
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