April 26, 2019 / 2:06 AM / 6 months ago

UPDATE 3-Chinese securities firm Shenwan Hongyuan drops 12 pct in poor HK debut

* Chinese broker raised $1.16 billion in HK share offer

* Biggest listing in Asia this year

* Stock closes at HK$3.2 (Updates with closing price, analyst comment)

By Julia Fioretti

HONG KONG, April 26 (Reuters) - Chinese securities firm Shenwan Hongyuan Group Co Ltd dropped 12 percent in a poor Hong Kong stock trading debut on Friday, after raising $1.16 billion in Asia’s biggest listing so far this year.

Shares in Shenwan Hongyuan closed at HK$3.20 ($0.4079), 12 percent below the offer price of HK$3.63, which was also the opening price.

Shenwan Hongyuan, which is also listed in Shenzhen, raised $1.16 billion when it sold 2.5 billion shares at the bottom of an indicative range of HK$3.63 to HK$3.93.

Markets have rallied this year, with Hong Kong’s benchmark Hang Seng index up 12.5 percent so far after a dismal 2018. The Hang Seng was broadly flat on Friday.

Ke Yan, co-head of research at Aequitas Research, said Shenwan Hongyuan’s poor performance was partly due to weak sentiment around Chinese brokers. The company’s Shenzhen stock has fallen 3 percent since the Hong Kong offering priced.

“In addition, we think that the IPO was priced at a premium to other brokers,” said Yan, who also publishes on research provider Smartkarma.

Hong Kong had a stellar 2018 in terms of stock market listings, with companies raising $36.3 billion in the city — the most of any stock exchange globally.

This year, however, is likely to be slower as the stream of companies in China looking to go public thins.

Companies have raised $4.1 billion in initial public offerings in Hong Kong so far in 2019, compared with $7.7 billion raised on the Nasdaq in New York, Refinitiv data showed.

Shenwan Hongyuan secured 13 cornerstones for its share offering, including ICBC Asset Management Scheme Nominee, Huaxia Life Insurance, China Life Insurance, China Reinsurance Corp and New China Life Insurance, which together bought 71 percent of the shares on offer, the offering prospectus showed.

Shenwan Hongyuan plans to use the proceeds to develop its enterprise finance business for merger-and-acquisition clients, provide a one-stop investment banking service for enterprise clients, and develop its personal finance business for wealth management needs, its prospectus showed.

ABC International, Goldman Sachs, ICBC and a unit of Shenwan Hongyuan were joint sponsors for the Hong Kong float. ($1 = 7.8448 Hong Kong dollars)

Reporting by Julia Fioretti; Editing by Jacqueline Wong, Christopher Cushing and Shounak Dasgupta

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