By Scott Murdoch and Donny Kwok
HONG KONG (Reuters) -Drinks maker China Resources Beverage’s shares traded nearly 15% higher in their Hong Kong debut on Wednesday, giving dealmakers hope that more big-ticket initial public offerings could be on the way.
The company sold 347.8 million shares in the deal at HK$14.50 each to raise $650 million.
The shares were trading at HK$16.64 in the early afternoon session, up 14.8% from the IPO price. Hong Kong’s benchmark Hang Seng Index was up 1.8%.
China Resources Beverage’s IPO is the second largest in Hong Kong this year, following Horizon Robotic’s deal to raise $696 million that was finalised on Tuesday. Those shares are due to start trading on Thursday.
The two deals, raising a combined $1.3 billion, have provided optimism for dealmakers and suggested potential signs of recovery in Hong Kong’s IPO market following a near two-year pause in new share sales.
China Resources Beverage makes the popular C’Estbon water brand and a range of milk and tea drinks sold across China. Its parent, state-owned conglomerate China Resources Holdings will keep a 51.1% stake after the listing.
The company’s retail tranche of the IPO was covered nearly 234.5 times while the institutional portion of the deal was 25.5 times covered, according to the firm’s regulatory filings. The high rate of orders from retail shareholders meant 40% of the shares on offer were sold to mom-and-pop investors.
Those results were among the strongest subscription rates for larger IPOs this year, but well off the Hong Kong market’s peak in 2021 when deals were often thousands of times oversubscribed.
“China Resources Beverage has performed relatively well because the public offering received a strong response with substantial oversubscription in the international placement, which was crucial (to its debut performance),” said Dickie Wong, Kingston Securities’ executive director of research.
Some foreign investors, especially in the U.S, had shunned investing in China for the past two years as geopolitical tensions remained high and the world’s second-largest economy was recovering after pandemic-related lockdowns.
The Hong Kong Stock Exchange and the Securities and Futures Commission last week announced they would work towards reducing the time it took to approve listings in a bid to help revive the city’s IPO market.
(Reporting by Scott Murdoch in Sydney and Donny Kwok in Hong Kong; Editing by Christian Schmollinger and Jamie Freed)
