iPhone maker heads for huge Chinese IPO

Tech arm of Apple assembly partner quickly wins Chinese approval to list in Shanghai

Hon Hai Precision Industy, which makes many of Apple’s products, is racing ahead with an initial public offering that may become China’s biggest debut since the 2015 stock market crash.

Foxconn Industrial Internet, a unit of Apple’s most important assembly partner, won approval on Friday to list in Shanghai about a month after publishing a prospectus that outlined plans to spend 27.3 billion yuan ($5.92b) on expansions into cuttingedge technology.

That speed underscores the anticipation around the Taiwanese company that embodies billionaire Terry Gou’s ambition of moving beyond assembling PCs and phones for the world’s top electronic brands.

Known as FII, the business could command a valuation of as much as 400 billion yuan by some estimates — on par with Sony Corp.

With sales of 355 billion yuan in 2017, its revenue is about the same as HP.

The fundraising could be the 11th largest on the mainland and would be one of the highest-profile tech listings in Shenzhen or Shanghai in years.

“The size of the IPO should be pretty close to what’s disclosed in the prospectus,” said Amy Lin, an analyst with Capital Securities.

Lin estimates the stock could command a share-price multiple of 15 to 19 times earnings for its debut.

Foxconn, which makes smartphones, cloud computing equipment and robots, wants the 27 billion yuan to fund projects including artificial intelligence and fifth-generation wireless technologies, positioning Hon Hai more centrally in the tech supply chain. Foxconn representatives did not respond to a request for comment.

Taipei-listed Hon Hai climbed 2.8 per cent on Saturday, its biggest gain since January 19.

A rash of suicides in 2010 at Foxconn provoked outrage over the harsh working environments in which upscale gadgets were made.

Foxconn hired psychological counsellors, set up a 24-hour care centre and attached large nets to factory buildings to prevent impulsive suicides, according to a 2011 Apple progress report.

Soon after, Apple developed standards and started audits of the hundreds of companies that produce components for its devices, threatening to pull business from those who flout labour laws. But the sheer scale of Apple's supply chain makes monitoring and enforcement of standards difficult. — Bloomberg