Small-cap IPO kings of Hong Kong face tough growth path
IPO bank Sunwah Kingsway contends with mounting costs as regulatory environment looks bleak
Sunwah Kingsway is the busiest IPO bank you have never heard of. The firm is one of the most active houses for leading small-cap initial public offerings on the Hong Kong exchange.
The bank is small and so are most of its deals. Among its recent offers was a HK$34 million initial public offering for mattress maker Jia Meng, and a HK$54 million listing for a windshield installer known as ZMFY.
"Kingsway do the most deals in town. Do you know the deals? No you don't," summed up a banker at a rival institution. Nevertheless, Sunwah Kingsway is a bustling home-grown institution. It is also controlled by one of Hong Kong's richest families, the Chois, who own Sunwah Group, one of Hong Kong's biggest frozen seafood importers.
The after-market performance of recent deals led by the firm has been good. On the listings led by Sunwah Kingsway since the start of 2013, the average first-day price gain is 87 per cent. The average one-month gain is 64 per cent, according to data from Thomson Reuters.
Good returns, but the public does not see much of the typical Sunwah Kingsway-led offer. The firm typically distributes its deals to family offices and hedge funds.
