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NetEase applies for secondary listing in HK

Game giant NetEase yesterday announced the launch of its secondary listing in Hong Kong and will begin trading on June 11 under the stock code “9999,” marking Hong Kong’s largest equity deal so far this year.Nasdaq-listed NetEase’s paperless offering is expected to be one of several large secondary deals in Hong Kong this year.According to the term sheet, NetEase plans to sell 171.48 million primary shares in the float, 5.15 million shares or 3 percent of which will be sold to retail investors. It has set a maximum price of HK$126 (US$16.26) for the retail tranche. It will set the international offer price by June 5.NetEase believes that listing in Hong Kong would offer it greater access to capital markets, particularly in Asia, and would attract a broader Asian and international investor profile that would be more representative of its Chinese and international user base, according to its prospectus.It will become only the second company to launch a secondary listing in Hong Kong, following Alibaba in 2019, under a rule change that finally allowed US-listed Chinese groups to offer such shares in the city.NetEase plans to price the offering on Friday when books close to investors, with the shares set to start trading on June 11. The proceeds are earmarked mainly for expansion overseas as well as pursuing innovation.In filings to the Hong Kong Stock Exchange, NetEase said one potential risk for investors was proposed US legislation that could force some Chinese companies to delist if their auditor had failed to comply with US audit oversight for three years.NetEase’s deal will be Hong Kong’s largest listing so far in 2020, Refinitiv data shows, and one of the largest globally, depending on its final size.NetEase’s American depositary shares will continue to be listed and traded on the Nasdaq Global Select Market. It was listed on Nasdaq in the US in 2000 and was the first batch of Chinese Internet stocks to land in the US Stock market. It ended at US$397.59 on June 1 when the US stocks closed. JD.com is expected to follow NetEase, with plans to list on June 18 and could raise about US$3 billion by selling down about 5 percent of its shares, it was reported earlier.The activity comes as markets pick up globally.Coffee maker JDE Peet raised 2.25 billion euros (US$2.5 billion) in its Amsterdam debut on Friday, while Warner Music was due to price its offering of up to US$1.8 billion in New York yesterday.Asia saw the largest deals early this year, with Beijing-Shanghai High Speed Railway raising US$4.4 billion in China in January and Thailand’s Central Retail some US$2.52 billion in February in Bangkok.
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