Tiny Hong Kong IPO Soars in Best Debut of 2020

An engineering services company that raised just $16 million in its Hong Kong initial public offering soared 186% on the first day of trading, making it the best debut in the city this year.

The performance of Macau E&M Holding Ltd.’s shares, which jumped as much as 255% intraday, is the best since Chen Lin Education Group Holdings Ltd. closed 193% higher than its offer price in November 2019. IPOs in Hong Kong have seen a surge in investor demand in the last few months, fueled by abundant market liquidity thanks to central banks’ efforts to soften the economic damage wrought by the coronavirus pandemic.

A Chinese bottled water giant earlier this week took the crown for being Hong Kong’s hottest IPO among retail investors, with some $87 billion in orders, representing 1,148 times the shares on offer. The overwhelming response highlighted just how hot the IPO market has become, with a consumer name attracting the level of investor interest that would normally be associated with hot tech or biotech names.

Since the start of June, which has seen a flurry of listings after Chinese tech giants JD.com Inc. and NetEase Inc. raising billions of dollars in share sales in the city, IPOs have closed an average 20% above their offer prices on their first day of trading, according to data compiled by Bloomberg. That is more than the average gain since the start of the year, which stands at 12%.

Even companies that raised over $1 billion -- which usually don’t have such eye-popping debuts -- have been staging impressive debuts. Nongfu Spring Co., the bottled water giant, rose as much as 85% on its first day and closed 54% above its IPO price. That was the city’s fourth-best performance on record among firms that raised more than $1 billion.

Still, soggy debuts do happen. Yum China Holdings Inc., the operator of KFC, Pizza Hut and Taco Bell restaurants in China, closed 5.3% lower on Thursday after raising $2.2 billion. It was the worst stock debut among billion-dollar listings in the city in more than a year.

UPCOMING LISTINGS:

  • Huazhu Group
    • Hong Kong stock exchange
    • Size up to $970m
    • Pricing Sept. 16, trading Sept. 22
    • Goldman Sachs, CMBI
  • Fulu Holdings
    • Hong Kong stock exchange
    • Size up to $115m
    • Pricing Sept. 11, listing Sept. 18
    • CMBI
  • Joy Spreader Interactive Technology

    • Hong Kong stock exchange
    • Size up to $225m
    • Books close Sept. 15
    • China Securities, China Merchants Securities, BOCOM International
  • Ming Yuan Cloud
    • Hong Kong stock exchange
    • Pre-marketing from Sept. 7
    • CICC, Citi
  • Neusoft Education
    • Hong Kong stock exchange
    • Pre-marketing Sept. 10-15
    • Citic Securities
  • Kioxia
    • Tokyo stock exchange
    • Size up to $3.3b
    • Pricing expected Sept. 28, listing Oct. 6
    • Morgan Stanley, Goldman Sachs, JPMorgan, Nomura, Bank of America
  • Big Hit Entertainment
    • South Korea exchange
    • Size up to $812m
    • IPO pricing on Sept. 28, subscription from Oct. 5-6
    • NH Investment, Korea Investment, JPMorgan
  • Happiest Minds Tech
    • India stock exchanges
    • Size up to $96 million
    • Offer runs from Sept. 7-9, listing around Sept. 17
    • Nomura, ICICI
  • Gland Pharma Ltd.
    • India stock exchanges
    • Filed July 10
    • Citi, Haitong, Nomura, Kotak
  • Kalyan Jewellers India Ltd.

    • Indian stock exchanges
    • Size as much as $235m
    • Axis Capital, Citi, ICICI Securities, SBI Capital Markets and BOB Capital Markets

More ECM transactions we are following:

  • Rajawali Group is reviving plans for a potential initial public offering of the Indonesian conglomerate’s gold mining arm as bullion prices surge, people with knowledge of the matter said
  • Zomato Pvt, an Indian food delivery startup, will file for an initial public offering in the first half of 2021, joining a rash of consumer internet companies raring to go public

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.

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