Biotech Moves to Reopen Hong Kong IPO Market
September 11 2019 - 8:16AM
Dow Jones News
By Joanne Chiu and Frances Yoon
A Chinese biotechnology company kicked off what would be Hong
Kong's first sizable listing after a summer of unrest and
stock-market weakness, on the same day as the city's
exchange-operator made a surprise bid for its London rival.
The listing by Shanghai Henlius Biotech Inc., which could raise
up to $477 million, would reopen a market that has shrunk sharply
compared with 2018, with a couple of blockbuster deals falling
through. Trade tensions, China's economic slowdown and unrest in
the city have dented market sentiment, and share-trading has
declined year-over-year.
Companies raised $9.5 billion in IPOs this year through Sept.
11, roughly 40% of the total raised in the same period last year,
according to Dealogic.
In July, Anheuser-Busch InBev SA halted a unit's near-$10
billion IPO, blaming market conditions, and in August people
familiar with the matter said Alibaba Group Holding Ltd. had
postponed plans for a multibillion-dollar listing in the city.
The Shanghai Henlius listing would represent about 12% of its
enlarged share base, and value the company at about $3.0 billion to
$3.5 billion, according to a term sheet seen by The Wall Street
Journal. The figures don't include an overallotment option to sell
more stock.
Other prospective issuers include consumer lender Home Credit
NV, which is looking to raise up to $1.5 billion and list by early
in the fourth quarter, and Chinese sportswear retailer Topsports
International Holdings Ltd., which aims to raise about $1
billion.
Sungho Im, chief executive at asset-management firm IM Capital
Partners Ltd., said investors' risk appetite was returning.
The city is also playing host to new bond sales. Volumes dipped
to $5.9 billion in August, but were still higher than the same
month a year earlier, and have since recovered to top $7 billion in
the first 11 days of this month, Dealogic says.
The figures cover Hong Kong-listed deals in dollars, yen, or
euros by bond issuers from Asian countries other than Japan.
Deals this week include $2.5 billion of green bonds from
Industrial and Commercial Bank of China's Hong Kong branch, and a
$600 million perpetual bond from Hong Kong insurer FWD Group. It
priced the deal to yield 6.375%, lower than initial guidance for a
yield of around 6.5%, implying solid demand.
In August, three Hong Kong-based bankers said investment
roadshows had been put off until September, including one for a
Chinese developer planning an inaugural dollar-bond sale. Some
bankers have been forced to cancel trips to meet clients or met
them in mainland China, while executives at some Chinese issuers
also delayed trips.
Citigroup's Asia co-head of debt syndicate, Rishi Jalan, said
bond deals this month had been oversubscribed. He said issuers had
to pay little or even negative new-issue premiums to borrow,
meaning some new securities offered lower yields than comparable
existing debt. "Most investors in Hong Kong are international
players who look at global rates and macroeconomic trends while
making investment decisions," Jalan said. "The recent events in
Hong Kong have not dampened investor sentiment in primary bond
markets."
Write to Joanne Chiu at joanne.chiu@wsj.com and Frances Yoon at
frances.yoon@wsj.com
(END) Dow Jones Newswires
September 11, 2019 08:01 ET (12:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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