By Joanne Chiu 

This article is being republished as part of our daily reproduction of articles that also appeared in the U.S. print edition of The Wall Street Journal (June 6, 2020).

Two of China's most valuable U.S.-listed companies progressed toward listings in Hong Kong, with e-commerce giant Inc. beginning to take orders for its stock sale and online-gaming group NetEase Inc. pricing its fundraising.

The two companies are following 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. on Friday began taking investor orders for a Hong Kong share sale that could raise $3.76 billion, based on the last closing price for its American depositary receipts, a term sheet showed. The Beijing-based online retailer is seeking to sell up to 4.3% of its enlarged share capital, and plans to debut on June 18 under the stock code 9618.HK.

A run-up in JD.Com's depositary receipts increased the deal's value to more than the $2.5 billion to $3 billion it previously planned. The company's U.S.-listed securities have surged more than 60% this year and hit a record high on Wednesday. The deal size would increase to $4.3 billion if an overallotment option is exercised.

Separately, NetEase, a rival to Tencent Holdings Ltd., was set to raise about 21.1 billion Hong Kong dollars ($2.7 billion) from its share sale. Its shares will start trading on June 11 under the stock code 9999.HK.

Orders easily outstripped the NetEase shares on offer -- demonstrating the depth of appetite for these listings, even though investors have long been able to buy New York-traded NetEase securities.

Institutional investors placed orders for about 10 times the amount of NetEase stock offered, a person familiar with the deal said. Orders from individual investors, who were originally set to account for just 3% of the deal, were more than 360 times the amount they were offered. That triggered an adjustment known as a clawback mechanism, and they will now account for 12% of the stock sale.

The company on Friday set the offer price for stock sale at HK$123 ($15.87) a share, according to the person familiar with the deal.

That 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.

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.

Units of China International Capital Corp., Credit Suisse and JPMorgan are the joint sponsors, or the most senior banks on the deal for NetEase, while BofA Securities, UBS and Citic Securities are joint sponsors for the JD.Com listing.

Write to Joanne Chiu at


(END) Dow Jones Newswires

June 06, 2020 02:47 ET (06:47 GMT)

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