NetEase and JD.com Move Toward Hong Kong Listings
June 04 2020 - 10:17PM
Dow Jones News
By Joanne Chiu
Two of China's most valuable U.S.-listed companies progressed
toward listings in Hong Kong, with online-gaming group NetEase Inc.
setting a price for its stock sale and e-commerce giant JD.com Inc.
filing a preliminary prospectus.
The two companies are following JD.com rival Alibaba Group
Holding Ltd. in securing secondary listings closer to their home
market, amid tensions between the U.S. and China. The Senate in May
passed a bill that could kick Chinese companies off U.S. stock
exchanges unless American authorities can inspect their audits.
NetEase, a rival to Tencent Holdings Ltd., plans to sell stock
at HK$123 ($15.87) a share, according to guidance sent out to
institutional investors on Friday. It is also selling a small
proportion of the new shares to individual investors.
The price represents a 2% discount to the last closing price of
NetEase's American depositary receipts. Each depositary receipt is
equivalent to 25 of the ordinary shares being sold in Hong Kong.
Follow-on stock offerings like this are typically priced slightly
cheaper than the shares outstanding.
The price implies NetEase could raise about 21.1 billion Hong
Kong dollars ($2.7 billion). Its shares will start trading on June
11 under the stock code 9999.HK.
Underwriting banks will have an option to sell 15% more shares
in the days after the listing. Units of China International Capital
Corp., Credit Suisse and JPMorgan are the joint sponsors, or the
most senior banks on the deal.
Founded by Chief Executive William Ding, NetEase was once
best-known for one of China's most popular internet portals, and
has reinvented itself as a videogame company.
It is the world's second-largest mobile-game company, its
listing document says, citing 2019 user-spending data for Apple's
iOS operating system and the Google Play app store for Android
smartphones. Online game sales made up more than three-quarters of
net revenue in 2019. Other businesses include web portals, music
streaming and online learning.
Separately on Friday, JD.com filed a listing document,
indicating its own Hong Kong debut was progressing. The filing
didn't say when it plans to list or how much it seeks to raise.
A person familiar with its listing plan said earlier that JD.com
plans to raise around $2.5 billion to $3 billion and to debut on
June 18. BofA Securities, UBS and Citic Securities are the deal's
joint sponsors.
Write to Joanne Chiu at joanne.chiu@wsj.com
(END) Dow Jones Newswires
June 04, 2020 22:02 ET (02:02 GMT)
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