Tencent Rival NetEase Moves Ahead With Hong Kong Listing -- 2nd Update
June 01 2020 - 9:15AM
Dow Jones News
By Joanne Chiu
Mobile-gaming group NetEase Inc. has begun taking investor
orders for a multibillion-dollar Hong Kong share sale, as momentum
builds for U.S.-listed Chinese companies to obtain secondary
listings closer to home.
The Nasdaq-listed group's secondary offering in Hong Kong comes
after a roughly $13 billion Hong Kong debut by Alibaba Group
Holding Ltd. last year, and is likely to be followed by another
stock sale in the city by Chinese e-commerce group JD.com Inc.
NetEase and JD.com are pursuing Hong Kong listings as U.S.
lawmakers push for greater financial scrutiny of Chinese companies
who trade on American exchanges.
NetEase on Monday said it is selling 171.48 million new shares
ahead of a trading debut in Hong Kong on June 11 under the stock
code 9999.HK.
Based on Friday's closing price for its American depositary
receipts, it could raise about $2.6 billion, a term sheet from one
of the banks handling the deal showed. It will set the final offer
price on June 5 based on the last closing price for its U.S.
securities and on market demand.
The online-gaming company set a maximum offer price for its
shares of HK$126 each ($16.25) for the small part of the offering
reserved for individual investors. The final offer price for the
international tranche, which accounts for most of the total stock
sale, could be higher.
China International Capital Corp., Credit Suisse and JPMorgan
are the deal's joint sponsors, or the most senior banks on the
deal. The underwriters would have the option to increase the deal's
size by up to 15%, after the listing, depending on market
conditions. That would raise the deal size to $3 billion, the term
sheet showed.
NetEase joined the Nasdaq in 2000. Its American depositary
receipts have risen nearly 25% this year, giving it a market
capitalization of more than $49 billion as of Friday. Each
depositary receipt is equivalent to 25 ordinary shares.
This is a sensitive time for U.S.-listed Chinese companies. The
U.S. Senate passed a bill in May that could kick Chinese companies
off U.S. stock exchanges unless their audits are inspected by the
U.S. Securities and Exchange Commission's audit-watchdog arm.
Hong Kong's stock exchange in 2018 revamped its rules to court
more listings from technology and biotechnology groups.
"I believe that returning to a market that is closer to our
roots will further fuel our passion in our business and our users,"
William Ding, NetEase's founder and chief executive, said in a
letter to investors that was included in the group's listing
document.
NetEase said it plans to spend some of the proceeds on expanding
its online-game offerings in overseas markets including Japan, the
U.S., Europe and Southeast Asia, and some on technology.
In January to March, NetEase's net revenue rose 18.3% from a
year earlier, to $2.4 billion, while net income from continuing
operations increased 49% to $501.5 million.
Write to Joanne Chiu at joanne.chiu@wsj.com
(END) Dow Jones Newswires
June 01, 2020 09:00 ET (13:00 GMT)
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