The WSJ reports,"a fresh spate of Chinese companies, including a drug maker and a real-estate developer, launched Hong Kong initial public offerings seeking to raise up to US$1.2 billion Monday and capitalize on recent gains in the city's stock market.
Luye Pharma Group Ltd., partly owned by a group of private-equity firms, is seeking to raise up to US$764 million in the biggest of the Hong Kong IPOs launched in recent weeks. Hong Kong's benchmark Hang Seng Index is up 5% since the start of May.
Sina Corp-backed social-video platform operator Tian Ge Interactive Holdings Ltd, which is raising up to US$208 million and a Beijing-based property firm Guorui Properties Ltd., which is raising up to US$242 million also began raising funds for IPOs Monday.
Luye Pharma, whose shareholders include CDH Capital, Citic Private Equity and New Horizon Capital, delisted from the Singapore stock exchange in 2012".
Luye will also be CDH's first Hong Kong offering since its failed IPO of WH Group, the Chinese pork producer that bought Smithfield Foods Inc. The up-to US$5.3 billion IPO, in which CDH is the single biggest shareholder, was pulled in April due to lack of demand from investors.
Since WH Group's high-profile flop, however, the fate of IPOs in Hong Kong has been improving, partly due to lower pricing. Of 11 IPOs in Hong Kong since the start of May, only two have fallen below their offering prices. Train maker China CNR Corp is down 1.9% from its float price, and Chinese port operator Qingdao Port International Co. is down 5.9%.
In contrast, many of the big IPOs that made their debuts in Hong Kong before May are struggling: HK Electric Investments, the trust IPO holding billionaire Li Ka-shing's electricity unit, is down 3.5% from its IPO price, whileChina Everbright Bank, which raised $3.2 billion at the end of last year, is trading down 11.3% from its listed level. HK Electric's US$3.11 billion IPO in January remains the world's biggest IPO so far this year.
"Investment sentiment towards IPOs has improved in recent months as most of new firms are listed at reasonable valuations," said Conita Hung, a director at Hong Kong-based Amicus Asset Management Ltd.
The reasonable pricing is working. Chinese property management company Colour Life Services Group raised US$122 million on Monday after pricing its Hong Kong IPO near the middle of its indicative price range at HK$3.78. The firm is scheduled to list in the city on June 30. In contrast, Chinese chemical makerTianhe Chemicals Group Ltd , which started trading Friday after an IPO that raised US$654 million, priced its deal earlier near the low end of an indicative price range.
