Toronto Star

JD Health raises $3.5B from Hong Kong’s red-hot capital markets

More than 120 firms have raised $44.6B through IPOs, secondary listings


The telemedici­ne arm of Chinese e-commerce giant Inc. raised $3.5 billion (U.S.) in Hong Kong’s largest initial public offering this year, taking proceeds from new listings in the city to a 10-year high.

JD Health Internatio­nal Inc., which operates China’s largest online retail pharmacy and provides other health-care services, priced its stock offering at the top end of an indicative range, after strong demand for its shares from investors.

The IPO, which could raise up to $4 billion if underwriti­ng banks exercise an option to buy additional stock after it starts trading, gives the Beijing-based company a valuation of $28.5 billion.

More than 120 companies have raised $44.6 billion through IPOs and secondary listings in Hong Kong this year, the highest since 2010 when the city logged nearly $68 billion from new listings, according to Dealogic. Companies from China have dominated the rankings, and make up the majority of Hong Kong’s more than $5 trillion stock-market capitaliza­tion.

Jie Lu, head of investment­s for China at Robeco, said Hong Kong remains an important financial hub for Chinese companies to raise capital. Some investors had been concerned about Hong Kong’s status as a major global financial centre during recent geopolitic­al tensions in the city, but Beijing wouldn’t want to close “this important window for internatio­nal investors to access China,” he said.

Technology firms that listed in recent years have also been able to sell more stock. On Wednesday, Chinese smartphone maker Xiaomi Corp. raised $4 billion via a share placement and sale of convertibl­e bonds, about a week after the company reported a jump in global smartphone sales for the three months to September.

Xiaomi’s shares fell 7.1per cent Wednesday after the new shares were sold at a discounted price. They have more than doubled in the year to date, giving the company a market capitaliza­tion of roughly $76 billion.

The robust fundraisin­g is solidifyin­g Hong Kong’s status as a major capital raising hub for Chinese companies amid strained relations between China and the U.S., and as American policy-makers have sought to step up scrutiny of New Yorklisted Chinese companies.

U.S. lawmakers on Wednesday are likely to consider a plan that would force Chinese companies whose shares trade on American exchanges to comply with audit-oversight rules within three years, or delist from the New York Stock Exchange or Nasdaq Stock Market. So far, Alibaba Group Holding Ltd., Yum China Holdings Inc. and have been among 10 U.S.-listed companies that have added secondary listings in Hong Kong over the past 13 months.

Robeco’s Mr. Lu said an increasing number of U.S.-traded firms returning to Hong Kong or the mainland for secondary listings would help them hedge any risk of U.S. restrictio­ns on Chinese companies.

JD Health fixed its IPO price at 70.58 Hong Kong dollars per share, and is scheduled to start trading Dec. 8, according to a term sheet seen by The Wall Street Journal. The company plans to use the funds raised to make investment­s and expand its business. Its listing will likely also result in a handsome payday for’s billionair­e founder Richard Liu.

This week, the company stopped collecting orders from institutio­nal buyers a day ahead of schedule, after the deal was multiple times oversubscr­ibed, according to a person familiar with the situation. The buyers include investment funds that typically hold stocks for long periods. BlackRock Inc., Tiger Global Singapore Pte. and Hillhouse Capital Management Ltd. were among so-called cornerston­e investors that committed to buy up to $1.35 billion stock in the IPO.

Demand from individual investors was also strong, according to Bright Smart Securities Chief Executive Edmond Hui Yik-bun, who said many investors took out margin loans to purchase JD Health stock. The offering was led by units of Bank of America Corp., Haitong Internatio­nal Securities Group Ltd. and UBS Group AG.

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