China Toymaker Joins Global IPO 1st-Day Pop Party with 79% Jump

(Bloomberg) -- A Chinese maker of toys encased in “mystery boxes” is the latest company to join the global initial public offering first-day pop party.

Shares in Pop Mart International Group Ltd., whose offerings include rabbit figurines with monster teeth, jumped as much as 112% on their debut on Friday before closing up 79%, the third-best this year for IPOs over $500 million in Hong Kong. That’s a day after home rental platform Airbnb Inc. saw its valuation balloon to about $100 billion on its trading debut in the U.S.

Flush with cash and hunting for yield as interest rates stay low, investors globally are flooding into new share sales in Asia and the U.S. even as the year is drawing to a close.

This week saw Hong Kong’s biggest IPO of the year, the $3.5 billion float of JD Health International Inc., surge as much as 76% on its debut, a huge move for an offering of that size. The health-care unit of China’s No. 2 e-commerce company JD.com Inc. has benefited as more people have turned to online health-care services during the pandemic.

As Pop Mart’s Friday surge shows, the IPO rally in Asia has extended beyond hot tech and health-care names. The scrapping of what would have been the world’s biggest IPO in November - fintech giant Ant Group Co.’s $35 billion listing - added to the flood of cash by releasing funds that had been locked up for that share sale and now needed a new home.

Over half of Hong Kong’s IPOs that have raised over $100 million this year have made investors money since their debuts, according to data compiled by Bloomberg. The average gain, weighted by deal size, is 31%.

In Pop Mart’s case, China’s faster emergence than other markets from the health crisis has focused investor attention on consumer names that should continue to be popular.

The Beijing-based firm raised $674 million in an IPO which priced at the top of the range and stopped taking orders two days early because of overwhelming investor demand. It makes toys with famous characters it designs or licenses from others, including Mickey Mouse and Harry Potter. One of its main products are “blind boxes,” which contain a hidden figurine with one of its characters.

The share jump boosted the value of the 48% stake held by Chairman Wang Ning and his wife to almost $6 billion, according to Bloomberg calculations.

Another example of companies that investors have bought as benefiting from China’s growth are in the real estate sector. China Resources Mixc Lifestyle Services Ltd. jumped 26% on its debut on Wednesday, the second-best performance ever for a property management firm raising more than $100 million from its float.

©2020 Bloomberg L.P.