Hong Kong’s biggest IPO since 2021 sizzles as Midea shares soar in blockbuster offering

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The Foshan-based company raised HK$31.01 billion last week, after offering its stock at HK$54.80 a share, at the top end of an expected price range.

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(L to R) HKEX CEO Bonnie Chan, Midea’s CFO Zhong Zheng, Chairman and CEO Fang Hongbo, and HKEX Chairman Carlson Tong, during Midea Group’s listing ceremony at HKEX on 17 September 2024. Photo: Jonathan Wong

Aileen Chuang

Published: 9:34am, 17 Sep 2024Updated: 4:40pm, 17 Sep 2024

Midea Group’s shares advanced in their Hong Kong trading debut, as the city’s largest initial public offering (IPO) in more than three years sizzled ahead of a widely expected rate cut from the US Federal Reserve later this week.

Using the stock code 0300, shares of the world’s largest maker of home appliances changed hands at HK$59.20 each when Midea Chairman Paul Fang Hongbo struck the ceremonial gong at Hong Kong’s stock exchange to mark the start of trading. The stock ended the day at HK$59.10 and was the most actively traded shares in the city.

The Foshan-based company raised HK$31.01 billion (US$3.98 billion) last week, after offering its stock at HK$54.80 a share, at the top end of an expected price range. Midea may exercise an option to sell 15 per cent more shares to meet the excess demand that saw the international tranche of the offering oversubscribed by 8.1 times and public investors overbuy by 5.3 times.

With strong interest from international investors, Midea may exercise an overallotment, or greenshoe, option that could bloat its deal size to US$4.6 billion, making it the world’s second-largest fundraising exercise this year, according to Bonnie Chan Yiting, the chief executive of Hong Kong Exchanges and Clearing Limited, after the trading debut.

The opening premium values Midea at HK$29.08 billion, according to data from the stock exchange. The IPO surpassed JD Logistics’ US$3.64 billion offering in May 2021, according to data compiled by the London Stock Exchange Group.

Cornerstone investors, who committed to holding on to the shares for at least six months, agreed to buy US$1.26 billion of Midea stock, or a third of the offering. They included Cosco Shipping Holdings (Hong Kong), UBS Asset Management (Singapore), China Structural Reform Fund II, and a BYD unit called Golden Link.