Ten­cent unit gains from HK frenzy

China Daily (Canada) - - BUSINESS - By LIN WENJIE in Hong Kong cher­rylin@chi­nadai­lyhk.com

China Lit­er­a­ture ini­tial pub­lic of­fer­ing gets over­sub­scribed by 620 times

Ten­cent-backed China Lit­er­a­ture, main­land’s largest on­line pub­lish­ing and e-book com­pany, has proven to be a money-spin­ner of sorts at the bourses after it raised about HK$520 bil­lion ($66.7 bil­lion) from its planned ini­tial pub­lic of­fer­ing in Hong Kong on Wed­nes­day.

The com­pany seems to have gained from the bur­geon­ing ap­petite for new econ­omy com­pa­nies in Hong Kong as it raised the sec­ond largest amount through an IPO in the city’s his­tory. It had planned to raise $1.1 bil­lion from the IPO. China Lit­er­a­ture saw its re­tail tranche over­sub­scribed 620 times after it closed for sub­scrip­tion on Tues­day. With this it has be­come the most pop­u­lar IPO in Hong Kong after China Rail­way Con­struc­tion Cor­po­ra­tion, which raised HK$535.4 bil­lion in 2008.

China Lit­er­a­ture, in which

Ten­cent holds a 65.38 per­cent stake, is ex­pected to price its IPO at HK$55 per share, at the top end of the HK$48 to HK$55 in­dica­tive range, ac­cord­ing to lo­cal me­dia, cit­ing sources fa­mil­iar with the mat­ter.

In­vestors are con­fi­dent that China Lit­er­a­ture’s stock price would see a stronger growth on its first day of trad­ing than the main­land’s first dig­i­tal in­surer ZhongAn On­line Prop­erty & Ca­su­alty In­sur­ance, which went pub­lic on the Hong Kong bourse in Septem­ber. Shares of ZhongAn jumped by 9.2 per­cent on its first trad­ing day in Hong Kong.

Es­tab­lished by the three Mas — Alibaba chair­man Jack Ma Yun, Ten­cent Hold­ings chair­man Pony Ma Hu­ateng and Ping An In­sur­ance chair­man Ma Mingzhe, ZhongAn took up about HK$200 bil­lion of cap­i­tal in the IPO, and was nearly 400 times sub­scribed ahead of its Sept 28 de­but, mak­ing it the most pop­u­lar IPO this year at that time.

“Zhongan can ben­e­fit from the ‘three Mas ef­fect’, that is why I bought its shares. And see­ing the strong mo­men­tum of Zhongan’s share prices, which surged 31 per­cent from its first list­ing day, I am con­fi­dent that China Lit­er­a­ture, which is backed by Ten­cent, will have a sim­i­lar growth and will stay pos­i­tive in the longterm,” said Cathy Ng, a 28-year-old in­vestor who sub­scribed to both Zhongan and China Lit­er­a­ture.

Li­nus Yip She­ung-chi, chief strate­gist at First Shang­hai Se­cu­ri­ties Ltd, noted that Hong Kong in­vestors have high ex­pec­ta­tions for new econ­omy com­pa­nies, and the brand ef­fect of China Lit­er­a­ture, as a sub­sidiary of Ten­cent, has stim­u­lated in­vestors’ en­thu­si­asm to sub­scribe for its IPO.

“Both ZhongAn and China Lit­er­a­ture have very strong plat­forms be­hind them, like Alibaba and Ten­cent, which are very pop­u­lar among in­vestors,” he said.

“Their suc­cess will strengthen the con­fi­dence of other new econ­omy com­pa­nies from the Chi­nese main­land who are plan­ning to list in the Hong Kong mar­ket,” he added, ex­pect­ing China Lit­er­a­ture to record a double digit growth on de­but.

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