JL MAG’s is the first offering to raise more than US$500 million ($670.5 million) in Hong Kong this year as China’s crack down on several private enterprises plus the prospect of rising interest rates cast a shadow over deals in the Asian financial hub. The slow 2022 start contrasts with a busy kickoff in 2021, when 16 companies priced near US$8 billion worth of shares last January, Bloomberg data show.
Shares of the 19 companies that debuted in Hong Kong over the past year after raising at least US$500 million rose by an average 18% on the first day of trade, according to data compiled by Bloomberg. The average gain among those that debuted over the past six months, though, was just 4%.
At the intraday low, LG MAG Rare-Earth was headed for the worst performance since Feb. 2018 for a Hong Kong listing bigger than US$500 million. A-Living Smart City Services Co. declined 23% in its first session on Feb. 8, 2018.
LG MAG Rare-Earth has said it aims to use proceeds of the share sale for construction of a production base in Ningbo, potential acquisitions through 2023 and expansion of a global industry-chain layout. Profit for the six months ending June 2021 was 220.6 million yuan ($35 million), a 141% jump over the same period a year earlier, according to the company’s prospectus.
See also: Don't ignore the commodity traders in a tariff war
Citic Securities Co. and BNP Paribas SA were joint sponsors of the Hong Kong deal.
Photo: Bloomberg
