JD.com, NetEase Set Asia Listings -- WSJ
June 06 2020 - 3:02AM
Dow Jones News
By Joanne Chiu
This article is being republished as part of our daily
reproduction of WSJ.com 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 JD.com Inc.
beginning to take orders for its stock sale and online-gaming group
NetEase Inc. pricing its fundraising.
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.
JD.com 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 joanne.chiu@wsj.com
(END) Dow Jones Newswires
June 06, 2020 02:47 ET (06:47 GMT)
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