Hong Kong Markets Bounce Back as China’s Biggest Pharma Aims for 1.27 Billion IPO

The deal is second on the list of companies that have raised above $1 billion in Hong Kong, as the city is waking up from sluggish IPO markets to show signs of revival.

The deal is second on the list of companies that have raised above $1 billion in Hong Kong in the last week, as the city is waking up from a long list of sluggish listings and IPO markets to show signs of revival.

As China’s biggest drug developer and producer, Jiangsu Hengrui Pharmaceuticals, aims to raise HK$9.89 billion ($1.27 billion) in a Hong Kong listing, companies continue to pour in initial public offering (IPO) plans in Hong Kong’s revitalised capital market.  

The deal is second on the list of companies that have raised above $1 billion in Hong Kong in the last week, as the city is waking up from a long list of sluggish listings and IPO markets to show signs of revival.

The first was Chinese battery manufacturer CATL, which priced its Hong Kong shares at HK$263 each, the highest amount in the range to fund almost $4.6 billion.

According to London Stock Exchange Group data, there was a $3 billion IPO in Hong Kong before CATL raised money in its IPO. It gave the strongest start to 2021. The credit goes to relaxed listing rules and enhanced global investor sentiment.

Singapore-based Mirxes Holding is seeking HK$1.09 billion under the rule that permits start-up biotechnology companies to list.

Hengrui’s initial public offering (IPO) follows Contemporary Amperex Technology, a manufacturer of electric vehicle batteries, which started earlier this week to raise at least US$4.6 billion.

It is coming to the ground slowly after years of stagnation, as Hong Kong’s capital markets recover in late 2024. According to exchange data, the entire market capitalisation of shares traded in Hong Kong was US$38.8 trillion at the end of April, up 21% from last year.

The benchmark Hang Seng index (market-capitalisation-weighted stock market index in Hong Kong) surged to a nearly two-month high on Wednesday after many companies reported optimistic earnings during a temporary truce in the US-China trade conflict.

According to a prospectus filed by the company to the Hong Kong Stock Exchange, Hengrui has started accepting orders from investors for 224.5 million shares, with prices ranging from HK$41.45 to HK$44.05. Local retail investors get approximately 5.5% shares. The remaining shares are reserved for the global audience.

The top price was 23% less than the stock’s closing price of 52.90 yuan in Shanghai, in keeping with other significant Hong Kong IPOs.

The stock increases by 1.1% on Thursday. Offshore listings typically sell stock to investors at a discount to gain interest.

Its revenue increased 22.6% in 2024, but its profitability increased 47.3% to 6.34 billion yuan (US$879 million) from the previous year.

Hengrui’s initial public offering (IPO) received US$533 million from seven key investors, including US investment company Invesco Advisers and Singapore sovereign fund GIC.

According to Hengrui, they will use most of the money raised for research and development (R&D) projects and to fund new manufacturing and research facilities in China and other countries.

They plan to use 45% of the funds raised to invest in clinical tests to develop drugs and their candidates, and 20% to create innovative medicines.

The rest of the money is for acquisitions, partnerships, and constructing new research facilities overseas.

The company was founded in 1970 as the state-owned Lianyungang Pharmaceutical Factory. Since then, the company has shifted its focus from producing generic medications to creating new ones. It is headquartered in Jiangsu province in eastern China.

Mirxes (specializing in disease screening in Asia, especially in Singapore and mainland China) is looking to list under the Chapter 18A listing framework for pre-revenue tech enterprises set forth by market operator Hong Kong Exchanges and Clearing. In Singapore, it has displayed its flagship product, which aids in the detection of stomach cancer, on the market.

On May 23, Hengrui and Mirxes will start trading.