Tianqi Lithium enters Hong Kong IPO for more than HK$13.4bn. However, bankers argue that their success would depend on the strong debut. Thus, they could attract investors. The Shenzhen-listed lithium producer offers around 164m primary shares. In other words, it is 10% of the company’s enlarged share capital. This also covers around HK$69-$82 each. If the exercise is full, there is an addition of 15% greenshoe taking the deal for as much as $2bn. If Tianqi makes a $1.44bn-$1.71bn deal, this would mark the biggest Hong Kong listing this year.
The major reason is because it exceeded the $544m float in January of ChiNext-listed JL Mag Rare-Earth. Furthermore, it could also become the highest because of the NYSE-listed Li Auto’s HK$11.8bn HK listing in August last year. Based on Refinitiv data, the new listing volume in the bloc jumped around 92% to 19-year low. Thus, only $2.3bn raised via IPOs as well as secondary listing.
A banker knowing the transaction marks that Tianqi’s deal is a huge deal if people look at the size in the latest IPO. However, it is not easy to apply in the market these days. Meanwhile, the company can still look forward to more demands as well as anchor investors. The situation recently shows that China has tightened scrutiny over technology companies in the IPO market.
Moreover, Russia’s invasion of Ukraine and inflation looms in the region and globally. In other words, having a launch for an IPO deal in China is hard now. 19 IPOs booked in June are still small with less than $150m each. Microport Neurotech for instance opened booking for a Hong Kong IPO of $43m. Plus, the smart learning devices maker, Readboy Education and natural gas distributor Huzhou Has raised $66m and $39m. These are very small. Alibaba raising IPO in HK for $671m also faced disappointing debuts.