Chinese tea chain Baicha Baidao shares slump in Hong Kong trading debut
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Shares in Chinese tea shop chain Sichuan Baicha Baidao Industrial fell more than 20 percent on Tuesday in its Hong Kong trading debut following a $330 million initial public offering (IPO).
The shares were sold at US$2.23 each in the IPO, which is the largest in Hong Kong so far in 2024.
Baicha Baidao shares opened down 10.1 percent and fell by as much as nearly 23 percent to $1.72 each in early trade.
The shares had been offered to investors at a fixed price of $2.23 rather than in a range that would have given the underwriters the ability to set a final price after gauging demand.
Baicha Baidao’s IPO attracted tepid interest from investors.
According to the company’s regulatory filings, Hong Kong retail investors did not take up the full amount of shares offered.
The retail tranche was only 0.5 times covered, which mean 7.44 million shares were reallocated to institutional investors.
The institutional tranche was covered 1.1 times, which is considered weak, especially compared to Hong Kong’s IPO boom times in 2020 and 2021 when deals were covered hundreds of times.
Questions & Answers
Q.How much capital did Baicha Baidao raise through its initial public offering?
How much capital did Baicha Baidao raise through its initial public offering?
Baicha Baidao raised $330 million from its initial public offering. This IPO is reportedly the largest in Hong Kong so far in 2024, despite the shares slumping on their trading debut.
Q.How did retail and institutional investor interest compare for this IPO?
How did retail and institutional investor interest compare for this IPO?
Retail investors only took up 0.5 times the offered shares, resulting in 7.44 million shares being reallocated. Institutional interest was also weak at 1.1 times covered, significantly below previous boom periods.