As the largest initial public offering (IPO) in the city in over three years fizzled before of the US Federal Reserve's widely anticipated rate decrease later this week, Midea Group's shares rose in their Hong Kong trading debut.
When trading began at HK$59.20 per share, shares of the largest home appliance manufacturer in the world traded hands at the Hong Kong stock market, with the stock code 0300. Midea Chairman Paul Fang Hongbo rang the ceremonial gong to signal the opening of trading.
The Foshan-based business raised HK$31.01 billion (US$3.98 billion) last week after pricing its shares at the upper end of a predicted range of HK$54.80 per. In order to satisfy the excess demand that resulted in the public investors overbuying the offering by 5.3 times and the foreign tranche being oversubscribed by 8.1 times, Midea may exercise its option to sell 15 percent extra shares.
In light of the positive response from foreign investors, Midea may exercise an overallotment, or greenshoe, option that could increase the size of the deal to $4.6 billion, making it the second-largest fundraising effort globally this year, following the trading debut, according to Bonnie Chan, the chief executive of Hong Kong Exchanges and Clearing Limited.
Data from the stock exchange indicates that Midea is valued at HK$29.13 billion based on the opening premium. The London Stock Exchange Group's data indicates that the IPO outperformed JD Logistics' May 2021 US$3.64 billion offering.
A portion of the offering, approximately US$1.26 billion, went to cornerstone investors who pledged to hold onto their shares for a minimum of six months. These investors made up one third of the offering. These include China Structural Reform Fund II, UBS Asset Management (Singapore), Cosco Shipping Holdings (Hong Kong), and Golden Link, a BYD subsidiary.
He Xiangjian, whose net worth is now assessed by Forbes to be US$22.9 billion, founded Midea in 1968. Based on sales and market value, Midea is the largest manufacturer of "white goods" worldwide, according to data that is accessible to the general public. Kuka, a German manufacturer of industrial robots, is also owned by Midea.
The majority of the funds raised by Midea through its Hong Kong initial public offering (IPO) will support the company's R&D initiatives, supply chain management and intelligent manufacturing system upgrades, distribution channel and sales network enhancements, working capital needs, and general corporate objectives.
According to market estimates, Midea's Hong Kong offer price was 21% less than the company's Monday closing share price in Shenzhen of 63.51 yuan. This is less than the typical discount of roughly 33% for dual-listed stocks in Hong Kong relative to Shanghai or Shenzhen.