Midea's US$3.5b sale biggest in three years

Agencies and June Chen

China's Midea has started taking investor orders for its share sale in Hong Kong, which could be worth as much as US$3.5 billion (HK$27.3 billion) and be the city's biggest listing in more than three years.

The Foshan-based appliance maker is offering 492.1 million shares at HK$52 to HK$54.80 a piece, 5 percent of which will be available in Hong Kong investors.

At the low end of the marketed price range, that represents a 25 percent discount to the company's Shenzhen-traded shares, which closed at 63.02 yuan (HK$69.31) on Friday.

Cornerstone investors have agreed to subscribe for US$1.26 billion of Midea shares, representing more than one-third of the total offering, including state-owned China Cosco Shipping and UBS Asset Management Singapore.

Midea said it expects to price its shares on September 13 and list on September 17.

In terms of fundraising, Midea will be the largest listing in the city since JD Logistics (2618) raised US$3.6 billion in 2021.

Hong Kong hasn't hosted a listing that's raised more than US$1 billion since battery supplier CALB's share sale in 2022.

Analysts expect Midea's sale will be fully subscribed due to discounts. A large proportion of shares has already been subscribed by institutional investors but amid weak sentiment in the local stock market, it would already be a success if the price retains its value.

Francis Kwok Sze-chi, the vice chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators, said: "Taking into account Midea's strong business performance, achieving a full subscription is not the question but rather how the company's shares will perform after listing."

Proceeds from Midea's sale will be used for research and development efforts, intelligent manufacturing system upgrades and distribution channel enhancement.

In other news, China's biggest logistic company SF Express aims to open share sale in the city as early as the end of this month with plans to raise at least US$1 billion, according to people familiar with the matter.

The share sales are uplifting news for the stock market as Hong Kong's IPOs have raised just US$2.5 billion so far this year, compared to more than US$50 billion in 2020.