Two Chinese internet companies are set to raise close to US$1 billion between them in Hong Kong initial public offerings.
Microblogging platform Weibo, and NetEase-backed music streaming site Cloud Village are racing to complete their fundraising ahead of the long year-end holiday.
Weibo, often dubbed the Twitter of China, is selling 11 million shares at a maximum price of HK$388 each (US$49.75), which could help it raise up to US$547.3 million ahead of what would be its secondary listing on Hong Kong's main board.
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The maximum offer price represents a 16 per cent premium to its Nasdaq-listed American depositary receipt (ADR) closing price at US$42.79 (HK$333.69) last Friday. Each ADR represents one ordinary share, and its Hong Kong shares will be fully fungible to its ADRs.
The Hong Kong stock sale will end on Thursday, when the final offer price will also be determined. Trading on the Hong Kong bourse, under stock code "9898" is scheduled to begin next Wednesday, December 8.
Chinese issuers have typically set the final price of their Hong Kong secondary offerings at a tight discount to their US-listed shares, because a big deviation from their ADR levels can lead to choppy trading of their stock after debut. Weibo's ADR has fallen about 32 per cent from its year-to-date peak of US$62.66 reached in July.
"We help the content creators on our platform to engage and interact with their followers and build up their social assets to create social value and monetisation opportunities," the company said in its prospectus.
Owned 44.4 per cent by Chinese online media giant Sina Corp, Weibo counts Alibaba Group, the owner of this paper, as its second largest shareholder with a 29.6 per cent stake.
Weibo generates revenues primarily from customers who purchase advertising and marketing services. This accounted for 86 per of its total revenues for the six months ended June this year.
The social media giant has 566 million monthly active users and 246 million average daily active users. The Beijing-based company plans to use the net proceeds to grow its user base, and upgrade its IT infrastructure.
The joint sponsors and joint global coordinators of the deal are Goldman Sachs, Credit Suisse, Citic Securities, and CICC.
Meanwhile, Cloud Village has priced its Hong Kong IPO at HK$205 per share, helping it to raise about US$421 million.
The final offer price is at the midpoint of an indicative range that was marketed to investors last week. The Hangzhou-based firm is issuing 16 million shares, or 7.2 per cent of its enlarged share capital. There is an overallotment option to sell up to 2.4 million shares if there is strong enough demand.
It will trade on Hong Kong's main board under the stock code "9899", and is scheduled for debut on Thursday. Bank of America, CICC and Credit Suisse are the joint sponsors and joint bookrunners of the deal.
These two IPOs precede two more sizeable deals that are poised to kick off in December.
China Tourism Group Duty Free, the world's largest travel retailer, may be targeting up to US$5 billion, according to previous media reports. The Shanghai-listed company is aiming to start its Hong Kong IPO around mid-December, a person familiar with the transaction has said.
SenseTime, a Chinese artificial intelligence company, is aiming to raise at least US$2 billion.
These mega IPO deals would give the Hong Kong stock exchange a shot in the arm. The city has been devoid of new issuances of over US$1 billion since Li Auto raised about US$1.7 billion in August, data from Refinitiv shows.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.