(Bloomberg) – Chinese tourism group Duty Free Corp, which has raised HK$16.2 billion ($2.1 billion) in Hong Kong’s largest listing this year, will delay its launch because of Tropical Storm Ma-on.
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Shares were selling at HK$158 each, well above the midpoint of a trading range, and when Hong Kong shares were priced last week, the company’s Shanghai share trading was discounted by around 27.5%. The Hong Kong Exchange and Clearing Limited suspended trading in equities and derivatives during the morning session, with trading scheduled to start at 1 p.m.
Proceeds from the retailer’s offering pushed the number of new shares sold in Hong Kong this year to $7.2 billion, according to data compiled by Bloomberg. Still, that amount is down about 80% from the same period last year, with large offerings becoming rarer around the world as rising interest rates and high inflation keep major issuers on edge.
The allotment of Hong Kong’s CTG Duty Free shares was aimed at long-term investors and sovereign wealth funds, with the top 15 buyers accounting for about 70% of the listing, a person familiar with the matter said after the shares were priced. The nine Cornerstone investors who committed to the transaction invested approximately $795 million in stock.
Shares changed hands below the offer price in gray market trading in Hong Kong on Wednesday. Data from Bloomberg shows that just 43% of Hong Kong listed companies are up on their first day of trading this year. This compares to a positive first-day performance for 55% of newcomers over the same period in 2021.
CTG Duty Free managed to sell Hong Kong shares as Hainan Island, a major tourist destination in China and the source of most of the company’s sales, faced the country’s worst Covid-19 lockdown since Shanghai’s lockdown earlier this year . Saw one of 19 eruptions.
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According to a filing this week, the international portion of the offering was 4.7 times oversubscribed. For the tranche reserved for private investors, multiple bids were made that roughly corresponded to the number of shares on offer.
Read more: China Covid cases fall for second day as holiday hotspots ebb
The company reported initial net profit of 3.94 billion yuan for the first half of 2022, down about 27% from the same period last year. According to the current annual report, around 70% of sales come from Hainan and 18.5% from Shanghai.
CTG Duty Free suspended a potential $5 billion Hong Kong listing last December, joining companies that chose not to close deals in a choppy market. Bloomberg News reported in June that sellers of tax-exempt goods like tobacco, alcohol and perfume are asking travelers to pay $3 billion to renegotiate the listing plan.
China International Capital Corp and UBS Group AG are joint sponsors of the CTG Duty Free offering.
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