$86b frozen as NetEase IPO closes early

Business | Avery Chen 5 Jun 2020

Chinese technology company NetEase saw the retail portion of its Hong Kong secondary listing oversubscribed by at least 130 times as of yesterday, freezing nearly HK$86 billion funds through margin financing, data from local brokers showed.

The online game developer is set to price its initial public offering, which could raise as much as HK$21.61 billion, before the New York market opens today. It closed the subscription window for institutional investors outside Asia yesterday noon, half a day earlier than planned, after its international tranche was significantly oversubscribed, according to Bloomberg.

NetEase is offering 171.48 million shares at not more than HK$126 apiece, of which 5.15 million shares, or 3 percent of total new shares, are available to retail investors. If the IPO's retail portion is heavily oversubscribed, the Hong Kong stock exchange's "clawback mechanism" will enable retail investors to take up to 20.58 million new shares, or 12 percent of the deal.

Meanwhile, Kangji Medical, a Chinese medical equipment company, sought Hong Kong IPO approval yesterday, Reuters IFR reported. The company is aiming to raise US$300 million (HK$2.34 billion) and plans to kick off pre-marketing next month.

Goldman Sachs, CLSA Capital and Merrill Lynch Far East are joint sponsors of the deal.

Also, Financial Street Property, mainland property management company, sought listing hearing yesterday for its IPO to raise around US$100 million.

The company provided property management services to 137 projects in mainland China, 42.1 percent of which are located in Beijing, as of September last year, according to its prospectus.

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