Shenwan Hongyuan IPO shows investment power

Business | Avery Chen and Reuters 26 Apr 2019

Mainland securities firm Shenwan Hongyuan (6806), which launched the largest initial public offering in Asia so far this year, starts trading on Hong Kong's main board today.

The parent of main-board-listed Shenwan Hongyuan HK (0218) has raised HK$8.87 billion after pricing its flotation at HK$3.63, the lower end of the indicative price range. The IPO was oversubscribed 2.78 times in the retail tranche.

Shares of the Shenzhen-listed investment banking group closed 1.38 percent lower than its offer price at HK$3.58 in the Bright Smart gray market last night.

Shenwan Hongyuan's net assets ranked seventh among all securities firms in the mainland at the end of 2018, while its revenue and net profits ranked fifth and seventh respectively.

Its net profit fell 9.55 percent year-on-year to 4.16 billion yuan (HK$4.83 billion), while revenues rose 4.25 percent to 21.5 billion yuan in 2018.

It plans to use the IPO proceeds for developing its securities business, investing in fintech and developing cross-border core businesses.

Shenwan Hongyuan secured 13 cornerstone investors, which together have committed to buy shares worth about US$829 million (HK$6.44 billion).

The cornerstone investors include ICBC Asset Management Scheme Nominee, Huaxia Life Insurance, China Life Insurance (2628), China Reinsurance (1508) and New China Life Insurance (1336).

Another newly-listed company, Bonny International (1906), which manufactures and sells seamless and traditional intimate wear products, traded flat at HK$0.58 in the gray market last night.

The Zhejiang-based firm raised HK$131 million after pricing its IPO at HK$0.58 , higher than the midpoint of its indicative price range of HK$0.46 to HK$0.6. The floatation was oversubscribed 94.9 times.

Other action saw Malaysia-based engineering contractor JBB Builders (1903) launching an IPO yesterday, aiming to raise up to HK$172.5 million with a minimum investment of HK$2,787 before a listing on the main board on May 10.

The offering's price range is from HK$1.18 to HK$1.38.

Also yesterday, shares of Singapore-based furniture seller Design Capital (1545) fell 10 percent to HK$0.27 on its debut.

And local builder Fullwealth Construction (1034), which listed in October, plunged 82 percent to HK$0.5 on a market turnover of HK$372.9 million.

The Securities and Futures Commission warned that Fullwealth had a high concentration of shareholders in February, with a group of 19 holding an aggregate of 20.6 percent of issued shares.

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