The Chinese IPO market is still going strong.
Legend Holdings, the parent company of computer maker Lenovo Group, will raise up to $1.96 billion in an initial public offering in Hong Kong this month, IFR magazine reported on Friday, citing sources with knowledge of the deal.
Legend will sell around 353 million shares, or 15% of its capital, in a price range of HK$39.80 to HK$43.00 each, IFR reported. The IPO will be priced on June 22 after soliciting orders from investors. Legend Holdings could not be immediately reached for comment.
Legend is the parent of Hong Kong-listed Lenovo, the world’s biggest personal computer maker. It also owns Chinese property developer Raycom Real Estate, private equity firm Hony Capital and venture capital firm Legend Capital.
The time to launch is perfect. Chinese stock markets are soaring on a combination of interest-rate cuts and the launch of a new trading link between Hong Kong and Shanghai. The new network opened China’s stock market to more foreign investment. Over the past year, the Shanghai Stock Exchange Composite Index has surged 149%, while the Shenzhen Stock Exchange Composite Index rocketed 190% during the same time period.
It’s been a big year for IPOs too. And Chinese investors are willing to pay top dollar for a good company. And that seems to be the main reason executives want to launch their shares now. Hong Kong alone has seen $11.8 billion in IPOs in 2015, beating the New York Stock Exchange’s $9.1 billion, reported The Wall Street Journal.
In fact, Hong Kong has been home to the world’s second- and third-biggest IPOs in 2015, the Journal said. HTSC, a Chinese brokerage firm better known domestically as Huatai Securities, raised $4.5 billion in Hong Kong. Rival GF Securities raised $4.1 billion. Those trail only a $4.8 billion float by Madrid airport operator Aena in Spain.
“The rising stock markets in Hong Kong and China are encouraging Chinese companies to tap capital (in China) this year,” Changhong Wang, head of China equity capital markets and corporate finance at Citic CLSA Securities, told the Journal.
In fact, some executives that have already launched their company’s stock in the US want to get in on the action too. So far, three Chinese firms listed in New York have taken steps to delist in the US and relaunch on the Chinese exchanges, They say they feel their shares are undervalued. Wink, wink, nudge, nudge.
Categories: Asia Unhedged