DRINKS maker China Resources Beverage’s shares ended 15 per cent higher in their Hong Kong debut on Wednesday (Oct 23), giving dealmakers hope that more big-ticket initial public offerings could be on the way.
The company sold 347.8 million shares in the IPO at HK$14.50 each to raise US$650 million.
The shares traded as high as HK$16.78 before the stock ended at HK$16.68 on the first day of trading, with 160.1 million shares worth HK$2.59 billion (S$439.8 million) changing hands. Hong Kong’s benchmark Hang Seng Index was up 1.3 per cent.
China Resources Beverage’s IPO is the second largest in Hong Kong this year, following Horizon Robotic’s deal to raise US$696 million that was finalised on Tuesday. Those shares are due to start trading on Thursday.
The two deals, raising a combined US$1.3 billion, have provided optimism for dealmakers and suggested potential signs of recovery in Hong Kong’s IPO market following a near two-year pause in new share sales.
China Resources Beverage makes the popular C’Estbon water brand and a range of milk and tea drinks sold across China. Its parent, state-owned conglomerate China Resources Holdings will keep a 51.1 per cent stake after the listing.
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The company’s retail tranche of the IPO was covered nearly 234.5 times while the institutional portion of the deal was 25.5 times covered, according to the firm’s regulatory filings. The high rate of orders from retail shareholders meant 40 per cent of the shares on offer were sold to mom-and-pop investors.
Those results were among the strongest subscription rates for larger IPOs this year, but well below the Hong Kong market’s peak in 2021 when deals were often thousands of times oversubscribed.
“China Resources Beverage has performed relatively well because the public offering received a strong response with substantial oversubscription in the international placement, which was crucial (to its debut performance),” said Dickie Wong, Kingston Securities’ executive director of research.
Some foreign investors, especially in the US, had shunned investing in China for the past two years as geopolitical tensions remained high and the world’s second-largest economy was recovering after pandemic-related lockdowns.
The Hong Kong Stock Exchange and the Securities and Futures Commission last week announced they would work towards reducing the time it took to approve listings in a bid to help revive the city’s IPO market. REUTERS
