NetEase prices secondary listing at HK$123/share and raises $2.7 billion; files publicly for HK listing

06-Jun-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

NetEase, the world’s second-largest mobile games publisher, priced its Hong Kong secondary listing at HK$123 (US$15.87) a share, gathering commitments worth $2.7 billion ahead of its debut in the financial hub on June 11, people familiar with the deal said on Friday.

Guangzhou-headquartered NetEase amassed enough pledges from investors to cover the offer multiple times, one of the people added.

The price represents a tight 2 per cent discount to the last closing price of NetEase’s depositary receipts of $405 on Thursday and a 3.1 per cent discount to the one-day volume-weighted average price of $412.67.

Investors’ take-up of the sale bodes well for e-commerce giant, which publicly filed its preliminary prospectus for a secondary listing in the city on Friday. is preparing to launch its offering on Monday.

The prospectus, which is redacted as is common in Hong Kong, did not provide much details about the sale itself. confidentially filed an application for the listing in April.

NetEase and are racing to complete their secondary listings this month amid strong demand among investors for technology listings and before the US stance on Chinese companies trading on its markets hardens further.

US President Donald Trump is dialling up anti-China rhetoric ahead of seeking a second term in November, pushing more Chinese technology firms to consider a secondary-listing closer to home. Hong Kong’s exchange is putting on a full-court press to attract them.

Last month, the US Senate passed legislation that could force Chinese and other foreign companies to delist unless they submit to audits by the Public Company Accounting Oversight Board, which examines the books of all publicly listed US companies. The China Securities Regulatory Commission is evaluating whether to allow US-listed mainland companies to face such audits. is planning to raise between 4 per cent to 5 per cent of its market capitalisation ahead of a secondary listing on Hong Kong’s main board slated for June 18, according to a separate source. Based on its US market cap, that works out to about $3.2 billion to $4 billion.

NetEase’s $2.7 billion in hand could rise to $3 billion if an overallotment option is exercised, according to a deal terms sheet. The deal is almost entirely aimed at international investors with just 3 per cent reserved for a Hong Kong public offer.

Their offerings follow e-commerce giant and rival Alibaba Group Holding’ $12.9 billion secondary listing in the city last year. Alibaba is the parent company of the South China Morning Post.

Hong Kong Exchanges and Clearing (HKEX) radically overhauled its listing rules in 2018 to allow technology firms with dual-class shares and pre-revenue biotechnology companies to list in the city.

The bourse has proposed further changes to its rules to allow more use of so-called weighed voting rights (WVR) shares as it tries to lure more US-listed mainland technology firms to come to Hong Kong, particularly as tensions have risen between the US and China.

At least 38 US-listed mainland tech giants, including Tencent Music, would not currently qualify to list in Hong Kong because they have corporate shareholders with a WVR structure, which are allowed by bourse rivals in the US and Singapore.

There are more than 200 Chinese firms with primary listings in the US, with an aggregate market cap of about $1 trillion.


Category: Hong Kong

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