Hong Kong IPOs get away with a protest discount

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    By Alec Macfarlane

    HONG KONG- Hong Kong’s IPO market is opening up again. Warehouse operator ESR Cayman last week pulled off a revamped $1 billion-plus offering. E-commerce giant Alibaba’s secondary listing plans are back on track too. But after months of anti-government protests, the investor welcome is tepid, and may be reserved for blue-chip sellers.

    Five months of clashes between demonstrators and police across the Chinese-run territory have left the economy battered, and bruised its equity market too. ESR and giant brewer AB InBev’s Asian arm were forced to scrap listing plans over the hot summer months, after rattled fund managers balked. Alibaba also put its Hong Kong plans on hold.

    Now, though violent confrontations on the street have not subsided, the benchmark Hang Seng index has recovered to where it was before mass demonstrations began, in part because of optimism around a US-China trade deal. ESR relaunched its initial public offering last month, with support from Canadian pension fund OMERS and some healthy first-half earnings. Budweiser APAC pushed through an overhauled $5 billion IPO in September. Neither has outshone the wider market since.

    But even a lukewarm reception won’t be for everyone. ESR and Budweiser APAC are heavyweights in their fields: a giant operator for warehouses used by e-commerce companies across the region, and the continent’s biggest brewer. Topsports, another debutant that secured $1 billion last month, is number one in China’s booming sportswear market. All three have managed to price at a premium to peers. That bodes well for Alibaba, which is eyeing an up to $15 billion Hong Kong secondary listing as early as November, Reuters reports.

    Moreover, both the Warburg Pincus-backed logistics firm and the beer giant needed a helping hand from big-name investors. That, plus an unimpressive performance since their debuts – ESR is down 5 percent on its second day of trading – should worry others waiting in the wings. For the likes of consumer-finance company Home Credit, data centre operator Global Switch and artificial intelligence upstart Megvii, an open market may not mean a welcoming one. – Reuters

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