NetEase, the Nasdaq-listed mainland internet company, began taking investor orders for its US$2.6 billion (HK$20.15 billion) float in Hong Kong on Tuesday – making it the first US-listed Chinese firm to launch a secondary listing in the city this year.
With US-listed mainland companies now facing an a tense climate in New York amid ongoing trade and diplomatic tensions between the United States and China, Hong Kong has become as an important destination for firms like NetEase.
It (NetEase) would sell 171 million shares capped at HK$126 per share – with a minimum investment of HK$12,727 for a board lot of 100 shares
“Investors’ enthusiasm for Hong Kong stocks has been rekindled,” Cheung Chi-wai, associate director at Hong Kong-based Prudential Brokerage Ltd told reporters on Tuesday. “They are riding high on the waves of US-listed mainland companies making a beeline back home (to Hong Kong).”
NetEase said in a prospectus filed with the Hong Kong stock exchange on Monday that it would sell 171 million shares capped at HK$126 per share – with a minimum investment of HK$12,727 for a board lot of 100 shares.
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“The company plans to use the net proceeds from the offering for global strategies and opportunities fueling the continued pursuit of innovation and general corporate purposes,” the prospectus says.
The offer is scheduled to close on Friday. NetEase, headquartered in the eastern Chinese city of Hangzhou, is looking to price the offering next Monday. It said it would make its debut on June 11. Pricing at HK$126 a share would give it a market valuation of over HK$21 billion.
The company, which has traded publicly on the Nasdaq stock exchange since June 2000, earned nearly 80 percent of its revenue from gaming in the first quarter of this year, according to its website. Founded in 1997, NetEase offers online services – including commerce, content and communications. It is regarded as a major rival of Tencent.
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Prudential Brokerage’s Cheung predicts NetEase’s performance during its debut in Hong Kong might be more spectacular than Alibaba’s.
In related developments, JD, the mainland’s second-biggest online retailer, has recently won approval to proceed with a secondary listing of up to US$3 billion in Hong Kong. It has been reported that it will make its debut soon after NetEase. These two debuts, following Alibaba’s US$13 billion stock sale last year, could be the two largest floats in Hong Kong this year.
Other US-listed mainland firms, including internet giant Baidu and the Chinese mainland largest online travel agency Ctrip, may be planning similar moves, according to industry sources.
