Staff reporter
Retail investors have flooded Chinese toymaker Bloks Group's Hong Kong initial public offering with more than HK$833.4 billion through margin financing, making it the fourth largest new listing by the amount of money borrowed through brokerages.
The retail tranche was more than 5,724 times oversubscribed, the highest on record after Most Kwai Chung (1716) and Herbs Generation (2593) that were oversubscribed by 6,288 times and 6,083 times respectively.
In value terms, the share sale only lags behind that of the shelved Ant Group IPO, Chinese short-form video platform Kuaishou Technology (1024), and New Horizon Health (6606), in which investors applied to borrow around HK$1.3 trillion, HK$1.26 trillion, and HK$844 billion for their IPOs.
The Shanghai-based company, which makes assembly-character toys including Ultraman and Transformers, will stop accepting orders from individual investors by noon today and is set to debut on Friday.
IPO refers to the process of a company offering its shares to the public for the first time, transitioning from a private company to a publicly listed one. Generally, an IPO is a way for companies to raise funds, expand their business, or enhance their brand visibility.
The process of applying for an IPO is straight forward: open a stock or securities account with a bank or brokerage; fill out the application form to subscribe the shares; ensure there is sufficient fund in the account after submitting application to the bank or brokerage; wait for the allotment result
In Hong Kong, new stocks are typically issued with 90 percent of the shares allocated to international placement for institutional investors, with the remaining 10 percent reserved for retail investors.
Within the retail portion, shares are further divided into Group A and B based on subscription amounts: Group A includes subscriptions below HK$5 million, and Group B refers to those above HK$5 million.
The term "top hammer" refers to the highest subscription level in Group B, often equivalent to half of the public offering's maximum subscription.
In recent years, for popular IPOs, many investors have used margin financing to maximize their chances of securing shares. Some brokers offer leverage of up to 100 times or more for retail investors to subscribe to IPOs. However, margin financing also involves borrowing money for investment and investors are expected to weigh the risks.
