Financial IPOs Are A Tough Sell in Hong Kong Right Now

Julia Cristina Silvi Fioretti

22 Nov 2019, 03:37 PM IST

(Bloomberg) -- Right after Alibaba Group Holding Ltd.’s blockbuster $11 billion listing in Hong Kong, consumer lender Home Credit NV formally scrapped its $1.5 billion initial public offering in the city, citing market conditions.

The cancellation of the share sale plan on Thursday comes as financial IPOs have dwindled in Hong Kong, partly on concerns about mounting signs of stress among small Chinese banks. Investors had pushed back against Home Credit’s targeted valuation because of a slowdown in its main markets including China and India, which could affect consumer sentiment, people familiar with the matter said.

Financial firms have raised $5.43 billion in Hong Kong so far this year, a 9.5% decrease from a year earlier, according to data compiled by Bloomberg. That extends a decline since 2015. Financial deals have also accounted for an increasingly small proportion of overall listings in Hong Kong, shrinking by more than two thirds over the last three years amid concerns about soured loans in China.

Financial IPOs Are A Tough Sell in Hong Kong Right Now

Bank of Guizhou Co., which had been seeking to raise as much as $1 billion in a Hong Kong IPO, began gauging investor demand in September, IFR reported, but never launched the deal. It is now considering a launch in December, IFR reported on Friday, citing unidentified people close to the deal.

The Chinese government has mounted a crackdown on risky funding practices which has sent ripples through the country’s more than 3,000 small banks, many of which are grappling with a mountain of bad loans. That comes as the Chinese economy grows at its weakest pace since the early 1990s, a concern that had weighed on Home Credit’s IPO ambitions.

Home Credit’s IPO shelving is the third billion-dollar deal to be pulled this year in Hong Kong, although two others - Budweiser Brewing Co. and ESR Cayman Ltd. - subsequently revived their offerings.

UPCOMING LISTINGS:

Alibaba Group Holding
- Hong Kong exchange
- Size $11.2b
- Listing Nov. 26
- Credit Suisse, CICC
Postal Savings Bank of China
- Shanghai exchange
- Size $4.1b
- Taking orders Nov. 28
- Citic Securities, CICC, China Post Securities, UBS Securities
China Zheshang Bank
- Shanghai exchange
- Size $1.9b
- Took orders Nov. 14; listing date TBA
- Citic Securities
Pharmaron Beijing
- Hong Kong exchange
- Size $589m
- Listing Nov. 28
- CLSA, Goldman Sachs, Orient Capital
Venus Medtech
- Hong Kong exchange
- Size up to $400m
- PDIE Nov. 11-22
- Goldman Sachs, CICC, Credit Suisse, China Merchants Securities
China Merchants Commercial Reit
- Hong Kong exchange
- Size about $400m
- Started gauging demand Nov. 14; listing date TBA
- Citigroup
Alphamab Oncology
- Hong Kong exchange
- Size $200m-$300m
- Started gauging demand Nov. 18
- Morgan Stanley, Jefferies, CLSA
Bangkok Commercial Asset Management
- Thailand stock exchange
- Size up to $887m
- Taking orders from Nov. 25-29, listing date TBA
- Trinity Securities, Kasikorn Securities, UBS
Longyan Zhuoyue New Energy
- Shanghai Star board
- Size $191m
- Took orders Nov. 11; listing date TBA
- Yingda Securities

More ECM situations we are following:

State-owned Bangkok Commercial Asset Management Pcl, Thailand’s biggest manager of distressed assets, will start taking investor orders Monday for its initial public offering, which could raise as much as 26.9 billion baht ($887 million).
Indonesia’s largest private airline PT Lion Mentari Airlines has decided to delay its planned initial public offering from this year, its spokesman Danang Prihantoro says.
SDIC Power Holdings Co. is gearing up to raise at least $500 million in a London listing that will be the second on the stock link between the British capital and Shanghai, people familiar with the matter said.
Alibaba Group Holding Ltd.’s Hong Kong debut is already off to a decent start before the shares officially begin trading next week, with bids at a 3.4% premium in the gray market.
Chinese contract drugmaker Pharmaron Beijing Co. raised HK$4.6 billion ($589 million) after pricing its Hong Kong listing at the top end of a marketed range, people familiar with the matter said.
Shares of Bitcoin mining machine maker Canaan Inc. soared and fell in their trading debut before ending the day a penny below their offer price in its $90 million initial public offering.