Tencent-backed Kuaishou’s IPO overbought 1,200 times by retail investors, sets record
- Retail tranche more than 1,200 times oversubscribed, Kuaishou’s Hong Kong IPO, topped demand for beverage giant Nongfu Spring’s IPO
- Kuaishou IPO sets final offer price at HK$115 a share, top-end of marketed range
Tencent-backed Kuaishou Technology wrapped up the first mega IPO of the year on Friday. It set the final offer price at HK$115 per share, top-end of the range, after the short video platform set a record as the most oversubscribed deal ever in Hong Kong attracting retail investors’ demand totalling HK$1.28 trillion (US$164.8 billion), according to preliminary data provided by people familiar with the transaction.
The top price has helped the loss-making company raise US$5.4 billion, the biggest IPO in 14 months since the US$13 billion raised by Alibaba Group Holding, owner of the Post, in November 2019.
Demand for Kuaishou’s shares looks set to top the scramble to buy stock in Chinese beverage giant Nongfu Spring, whose US$1.1 billion IPO last August was overbought 1,147 times.
Demand was also strong for the stock among institutional investors and underwriters had to close the book on the much larger institutional tranche two days earlier than scheduled.
“We’ve had over HK$200 billion worth of applications. Customer demand exceeded our expectations, especially from millennials,” said Ryan Haugarth, head of retail securities, wealth and personal banking for Hong Kong, HSBC, referring to the total amount of IPO loan received for Kuaishou, which exceeded the bank’s original HK$150 billion budget. HSBC is a joint-bookrunner for the deal.
Kuaishou Technology had marketed the IPO at a range of HK$105 to HK$115 per share. There is an overallotment option for the underwriters to sell up to 54.8 million more shares, which if exercised could bump up funds raised to US$6.2 billion.
Bank of America, China Renaissance and Morgan Stanley are joint sponsors of the deal.
The IPO by the world’s second biggest short video app, which has 262.4 million daily average users, came amid rising turnover on the Hong Kong stock exchange. Daily average turnover on the mainboard since the start of January averaged HK$244.9 billion, dwarfing the earlier record of HK$165.1 billion reached in June last year.
While Kuaishou’s trailblazing IPO will lift sentiment for the sector, analysts said it might not directly help bolster valuations for other planned secondary listings, such as that of Bilibili. The valuations are likely to be similar to the US listed counterparts, they added.