Frenzied Retail Demand for Hong Kong IPOs is Waning

(Bloomberg) -- In stark contract to last quarter, companies seeking a listing in Hong Kong this year only managed to price their deals at the lower end of a marketed range.

Five out of the six initial public offerings completed this month were priced at the lower band of the target, according to data compiled by Bloomberg. In comparison, 75% of the deals of a similar size were priced at the higher end of the range last quarter, the figures show.

The performance of companies debuting has also been more lukewarm, with three out of four newly listed shares trading an average 17% below their offer price, while the Hang Seng Composite Small Cap Index has gained 2.7% during the same period. The largest deal to have begun trading this year is from Forward Fashion (International) Holdings Co., which pocketed $25.7 million. It closed 27% below its IPO price.

These are signs that demand is weakening from retail investors after a frenzied market last year. IPOs raising less than $30 million had an average retail subscription ratio of 112 times in 2019, compared with 26 times for the six offerings completed this month.

Despite the cooling appetite, an additional 17 deals are expected to price and trade in Hong Kong this month, with a target fundraising tally of $1.24 billion. That would make it the busiest January since 2018, according to data compiled by Bloomberg.

UPCOMING LISTINGS:

• Shanghai Gench Education Group
  • Hong Kong exchange
  • Size $78m
  • Listing Jan. 16
  • Macquarie

• Jiumaojiu International Holdings

  • Hong Kong exchange
  • Size $282m
  • Listing Jan. 15
  • CMB International
• Central Retail
  • Thailand stock exchange
  • Size up to $2.65b
  • Pricing date TBD
  • Bualang Securities, Phatra Securities, Credit Suisse, Morgan Stanley, UBS

• Huijing Holdings

  • Hong Kong exchange
  • Size up to $242m
  • Listing Jan. 16
  • China Galaxy International
• I-Mab Biopharma
  • Nasdaq exchange
  • Size up to $111m
  • Pricing Jan. 16
  • Jefferies, CICC
• Lizhi
  • Nasdaq exchange
  • Size up to $53m
  • Pricing Jan. 16
  • Citi, Haitong, AMTD, Needham, Tiger Brokers
• Phoenix Tree Holdings
  • New York Stock Exchange
  • Size up to $175m
  • Pricing Jan. 16
  • Citi, Credit Suisse, JPMorgan

• Shenzhen Leoking Environmental Group

  • Hong Kong exchange
  • Pre-marketing started Dec. 18
  • CLSA sole sponsor

More ECM situations we are following:

• InnoCare Pharma is seeking a listing on the Hong Kong exchange, looking to raise about $200 million, IFR reported, citing unidentified people close to the plans.
• Yum China is considering a Hong Kong listing, IFR reported, citing unidentified people familiar with the matter.

SEE ALSO:

• Asia ECM Weekly Agenda
• IPO data
• U.S. ECM Watch
• EU ECM Watch
• To receive the ECM Watch in your inbox daily, click the “subscribe” button at the top of this article

--With assistance from Julia Fioretti.

To contact the reporter on this story: Zhen Hao Toh in Singapore at ztoh4@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Cecile Vannucci

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