Laopu Gold shares plunges following $2.7 billion share sale plan

Shares of Laopu Gold (6181) plunged as much as 8 percent following a share sale plan to raise HK$2.72 billion. 

The Beijing-based luxury jeweler plans to issue 3.71 million shares at a placing price of HK$732.49 apiece, a 4.5 percent discount to its closing price on Tuesday, according to a filing on Wednesday. 

The new shares represent around 2.1 percent of the enlarged total shares. Laopu will receive net proceeds of HK$2.71 billion from the share placement. 

It plans to use 70 percent of the fund for inventory reserves, 10 percent for the expansion of boutiques, optimization of existing boutiques locations and floor area expansion and 20 percent to replenish working capital and for general corporate purposes. 

Laopu’s shares slumped nearly 10 percent in the past six months but remained up by more than 170 percent this year and over 1,600 percent since its listing in June last year.