By Scott Murdoch and Donny Kwok
SYDNEY (Reuters) -Midea Group shares rose as much as 9.5% on their trading debut in Hong Kong on Tuesday with the Chinese home appliances maker raising nearly $4 billion in the city's largest share offering in almost four years, bolstering hopes for a revival in large Chinese issuances.
The stock ended up 7.8% at HK$59.10 on its debut.
Midea, also listed in Shenzhen, priced its shares at HK$54.80 each in its Hong Kong float. Mainland Chinese markets were closed on Tuesday for mid-autumn festival holidays.
Midea's listing is the largest in Asia this year and second biggest globally behind Lineage Inc's New York IPO in July which raised $5.1 billion, LSEG data showed.
Midea's institutional tranche was oversubscribed by eight times and the Hong Kong retail offering portion was 5.31 times covered, Midea's regulatory filings showed.
The oversubscription rates, while higher than recent Hong Kong deals, remain well below the city's capital markets' boom in 2021 when transactions were hundreds if not thousands of times covered.
"Given how investors have lapped up such a big deal (Midea), one can expect investment bankers will be trying to get more quality names to list in Hong Kong," said Devi Subhakesan, an analyst at research firm Investory who publishes on investment research platform Smartkarma.
HOPES FOR MORE LISTINGS
Trade tensions between the United States and China and high interest rates globally have dampened foreign investors' appetite to buy into Hong Kong and Chinese equity capital markets deals, according to bankers and advisers.
However, bankers are hopeful a positive performance by Midea in its debut could prompt an increase in the number of potential IPO candidates.
"The strong performance by Midea will probably lead to a few more companies trying their luck with mainland to Hong Kong listings and overall IPOs as well, in our view," said Sumeet Singh, a director at Aequitas Research.
Midea rose as high as HK$60 per share, 9.5% above the offer price, with 65.1 million shares worth HK$3.84 billion changing hands. Midea was the second most actively traded stock by turnover on the Hong Kong market on Tuesday, exchange data showed.
The bourse's Hang Seng Index was up 1.4%.
Midea sold 565.9 million shares in the deal and the final price set was about a 20% discount to Midea's Shenzhen listed share price. Mainland Chinese shares typically trade at a premium to Hong Kong-listed stocks.
Midea increased the number of shares on sale after receiving strong demand from investors during the bookbuilding process.
Midea's deal means there have been $6.5 billion worth of IPOs and listings in Hong Kong so far in 2024, Dealogic data showed, up from $2.7 billion at the same time last year.
When Hong Kong's markets were at a record high in 2021, there had been $35.7 billion in deals by the same point in the year, the data showed.
Midea's debut followed that of Bajaj Housing Finance on Monday, India's largest and 2024's most heavily subscribed listing. Bajaj's shares more than doubled on their debut, making it the fourth-best major listing in a red-hot Indian IPO market this year.
(Reporting by Scott Murdoch in Sydney and Donny Kwok in Hong Kong; editing by Muralikumar Anantharaman, Sonali Paul, Emelia Sithole-Matarise and Jason Neely)
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