An IPO for China Literature (0772.HK), Tencent Holdings’ online publishing arm, has raised $1.1 billion with the retail portion gathering demand that was 625 times the number of shares on offer, setting the stage for a sterling debut on Wednesday.
The offering for China’s biggest e-book company priced at the top of its marketed range of HK$48–HK$55 range, Tencent said in a statement, confirming a report from Thomson Reuters IFR last week.
Tencent added that the international portion of the offering was “very significantly over-subscribed.”
“A hefty gain is expected, with the gray market price shooting as high as HK$77,” said Steven Leung, a sales director at UOB Kay Hian brokerage in Hong Kong. That represents a jump of about 40 percent over its IPO price.
“China Literature is attractive as it has quite a sound business model and is a platform that is making money with a solid foundation. But still the valuation is way too high, in particular compared with its parent,” he said.
China Literature, which is 62 percent owned by Tencent (0700.HK), has a business akin to Amazon.com Inc’s (AMZN.O) Kindle Store, operating a platform with 9.6 million literary works from 6.4 million authors.
Private equity firm Carlyle Group LP (CG.O) owns 12.2 percent of China Literature while Trustbridge Partners, a private equity firm founded by Shujun Li, the former CFO of Shanda Interactive, holds 6 percent.
The listing comes some six weeks after the debut of ZhongAn Online Property & Casualty Insurance Co (6060.HK), which jumped 18 percent on its first day of trade and is now up almost 30 percent over its IPO price, boosting Hong Kong’s hopes of luring future Chinese technology start-ups.
Razer Inc, a gaming hardware maker backed by Intel Corp (INTC.O) and Hong Kong billionaire Li Ka-shing, has priced its IPO near the top end of the range, raising HK$4.12 billion ($528 million), IFR reported on Tuesday.