THE frenzy over a toymaker’s Hong Kong initial public offering has created a new billionaire.
Zhu Weisong, founder and chairman of Bloks Group, was catapulted into the ultra-rich ranks after the company’s US$215 million debut on Friday (Jan 10) drew overwhelming demand from individual investors. Shares surged 41 per cent to HK$85 on its trading debut.
It adds to a pipeline of IPOs in Hong Kong that are supercharging wealth. Last month, renowned Chinese makeup artist Mao Geping became a billionaire when his namesake beauty company soared 77 per cent in its debut.
Zhu, a former gaming company executive, owns almost half of the toymaker, the company prospectus shows, with his stake worth about US$1.3 billion as of Friday.
The ex-software engineer made another US$300 million from his early venture in Chinese gaming firm Youzu Interactive, taking his total fortune to US$1.7 billion, according to the Bloomberg billionaires Index.
Zhu founded Bloks in 2014 after his routine of buying gifts for his two children during business trips sparked an interest in the toy market. He left Youzu the next year to focus entirely on the new business.
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Bloks started out with a focus on Lego-like building blocks and expanded into assembly character figurines in 2022, featuring popular animations like Ultraman and Transformers, with the majority of its revenue now coming from the latter business.
Despite rapid revenue growth in recent years, Bloks has remained unprofitable since at least 2021, as stated in its prospectus.
“There is certainly a positive halo around the games and general entertainment space,” Benjamin Harburg, managing partner at Magic Stone Alternative Investment, said of the demand for Bloks shares. “While Chinese appetite for high-end retail continues to decline, lower ticket mass-market items are doing well across verticals.”
As for Bloks, demand was also helped by an abundance of zero-interest loans made available for the purchase of the stock. Individuals sought around HK$879 billion (S$155 billion) in margin financing to participate in the IPO, reflecting around 6,000 times the number of shares initially set aside for them.
The demand prompted the company to increase the number of shares it sold and allowed it to price the stock at the top of its marketed range, resulting in Bloks raising HK$1.67 billion.
Still, Bloks relies more on licensing superheroes such as Ultraman than Pop Mart, which may limit the stock’s upside, according to Nelson Yan, co-chief investment officer at Fosun Wealth International in Hong Kong. Bloks is more of a short-term opportunity rather than a long-term value investment, he said.
After raising more than US$11 billion in 2024, dealmakers are expecting Hong Kong IPOs to continue going up this year. First-time share sales that raised US$100 million to US$500 million in the city saw an average 12 per cent gain on their debuts, though they reversed to an 8.5 per cent decline after a month of trading, according to data compiled by Bloomberg. BLOOMBERG
