COUNTRY REPORT CHINA“Some investors did find the deal
expensive and skipped it. But a lot more
investors think the strong growth and
good management of the company
justify such a price tag,” said one of the
people.
Five cornerstone investors have
committed to taking up a combined
US$375m of the deal. Hillhouse Capital and
Greenwoods Asset Management will each
take up US$90m, Morgan Stanley Asia and
Snow Lake US$80m each and Ward Ferry
US$35m.
Pricing is slated for September 17.
Trading of the company’s shares will start
on September 26.
CMB International and Goldman Sachs
are joint sponsors of the proposed IPO.
The two banks are also joint global
coordinators and joint bookrunners with
CICC. Citigroup and UOB are the other
bookrunners.
› SHANDONG GOLD MINING LAUNCHES IPO
Shanghai-listed SHANDONG GOLD MINING
has launched a Hong Kong IPO of up to
HK$6.02bn.
The state-owned company is selling
327.7m H-shares, representing 15% of its
enlarged capital, in an indicative price
range of HK$14.70–$18.38 each.
The price represents a discount of 31%–
45% to the company’s A-share close last
Wednesday. It also translates into a 2019
P/E of 16.25–20.32.
There is a 15% greenshoe.
The deal attracted five cornerstone
investors to take up a combined US$412m,
or about 60% of the deal based on the mid-
point of the price range.
China Structural Reform Fund has
committed US$150m, CCT China Merchant
Buyout Fund about US$70m, ICBC Asset
Management Scheme Nominee about
US$97m, China National Gold Group Asset
Management US$45m and Zhaojin Mining
US$50m.
The pricing of the deal is slated for
September 20. The shares will start trading
on September 28.
The company will use the proceeds for
the repayment of loans used to finance
the acquisition of the Veladero mine in
Argentina.
CCB International, China Securities
International and ICBC International are the
joint sponsors.› CHINA RENAISSANCE BOOKBUILDINGInvestment bank CHINA RENAISSANCE started
bookbuilding last Thursday for a Hong
Kong IPO of up to HK$2.96bn.
The company is selling 85m primary
shares, representing 15.5% of its enlarged
capital, at an indicative price range of
HK$31.8–$34.8 each.
The price range represents a pre-shoe
2019 P/E of 14.4–15.8 and a 2020 P/E of
10.1–11.
There is a 15% greenshoe.
Three cornerstone investors have agreed
to take up a combined US$125m or 34.7%
of the deal based on the mid-point of the
price range.
Alipay (Hong Kong), a subsidiary of Ant
Financial, has pledged US$50m. Asian
alternative investment management firm
Snow Lake has committed US$50m and
private banking and asset management
group LGT US$25m.
Pricing is slated for September 19
and trading in the company’s shares for
September 27.
China Renaissance, which focuses on
new economy businesses, was founded by
Bao Fan in 2005.Nio rides out China-to-US volatility
Equities Chinese Tesla rival rockets on second trading day while four others trim IPO targetsThe rollercoaster debut of Chinese electric
car company NIO last week has underlined the
extreme volatility surrounding China-to-US
listings.
Nio made its trading debut last
Wednesday in New York after raising US$1bn
from a NYSE IPO, well short of the US$1.8bn
target while it first filed for the float.
The Tencent-backed company sold 160m
American depositary shares at US$6.26 each,
near the bottom of an indicative price range
of US$6.25–$8.25.
On its first trading day, Nio shares traded
down immediately at open and fell as low
as US$5.35, losing as much as 14.5% at one
point. Thanks to some support later in the
day, the stock closed at US$6.60 for a 5.4%
gain.
The stock then rocketed in the second
trading day last Thursday, soaring as much
as 92% before ending the day at US$11.60,
up 76%. About 158m shares changed hands
that day, more than double that of the first
day.
People close to the Nio IPO reckon the
second-day pop could be related to investors
covering their short positions.“There was quite heavy short-selling in
the stock in early trading on day one. Some
investors might have rushed to cover their
position on day two and hence pushed up the
price,” said one of the people.
Online pharmacy 111 also experienced a
volatile debut on its first trading day last
Wednesday.
The company priced a downsized
US$99.4m IPO at US$14 per share. It
planned to sell 9.3m primary ADS but
eventually only sold 7.1m.
The stock traded as high as US$16.83
before reversing course and falling to
US$11.58. The stock stabilised to finish at
US$13.80, down 1.4%.SELECTIVE BUYERS
US investors remain selective in embracing
Chinese IPOs despite Nio’s second-day pop.
Last Friday, Chinese news aggregator
QUTOUTIAO raised US$84m from a smaller
Nasdaq IPO after selling fewer shares than
planned.
The company, which counts internet giant
Tencent Holdings as a shareholder, planned
to sell 16m ADS in an indicative price range ofUS$7–$9 each. JD.com had agreed to invest
$40m.
It eventually sold 12m ADSs at US$7 each.
The final price represents a 2019 P/S of 1.83
and a 2020 P/E of 14.6.
Also last week, Chinese consumer finance
company X FINANCIAL and smart home
appliances maker VIOMI TECHNOLOGY both
started bookbuilding for smaller-than-
planned US IPOs.
X Financial is selling 11m primary ADS
at US$9–$11 each to raise up to US$121m,
compared to the US$250m it has targeted.
The price range represents a 2019 P/E of
6.7–8.1 before greenshoe exercised.
Existing shareholder Zhu Baoguo has
indicated an interest to buy up to US$30m
of the deal, while several investors have also
agreed to buy up to US$70m of shares.
The deal will price on September 18.
Xiaomi-backed Viomi, meanwhile, is
selling 11.4m primary ADS at an indicative
price range of US$9–$11 each to raise up
to US$125.4m. It filed for a US$150m deal
earlier.
The deal will price on September 24.
FIONA LAU