SHARES of China Resources Beverage Holdings rose 14 per cent early in their trading debut in Hong Kong, showing a strong response to one of Hong Kong’s biggest initial public offerings (IPOs) this year.
The stock traded at HK$16.46 after an IPO priced at HK$14.50, the top of a marketed range. The owner of the C’estbon bottled-water brand raised about HK$5 billion (S$847 million) in the offering.
The listing comes during the busiest week for Asia-Pacific trading debuts in more than two years, with around 20 deals poised to raise more than US$8 billion. Chinese companies have been stepping up share sales to raise cash, taking advantage of the broader market rally on optimism over Beijing’s stimulus measures.
Listings in Hong Kong this year have seen an average first-day gain of 5.7 per cent. The Hong Kong portion of China Resources Beverage’s offering was 234 times oversubscribed amid strong orders from retail investors, who were allocated 40 per cent of the shares.
Cornerstone investors including a unit of China Tourism Group and UBS Asset Management took about 48 per cent of the offering. China Resources Beverage is receiving all of the IPO proceeds, which it said it will spend on expanding production capacity as well as sales and marketing activities.
The funds may help the company in its battle with competitors. Stiff competition in the bottle-water industry and China’s consumption slowdown has hurt shares of peer Nongfu Spring.
“CR Beverage’s oversubscribed Hong Kong IPO is likely to further heat up the price war among China’s bottled-water makers as it gives the C’estbon water owner a war chest,” Bloomberg Intelligence analyst Ada Li wrote in a note.
Hong Kong IPOs have raised US$8.7 billion so far this year, beating all of last year’s proceeds. That was helped by appliance maker Midea Group’s US$4.6 billion share sale last month, the city’s largest listing in over three years.
Looking at other offerings, autonomous-driving technology company Horizon Robotics will debut shares in Hong Kong on Thursday (Oct 24) after having priced its US$696 million IPO at the top of the range. BLOOMBERG
