Citic Securities disappoints on Hong Kong trading debut

Citic Securities ended the day at HK$13.30, the same as its listing price, while the benchmark Hang Seng Index gained 5.7% and the financial sub-index jumped 6.5%, Reuters reported. Citic Securities Corporate Finance was brought in as a stabilizing manager for the offering and this role often involves preventing a stock from falling below its offer price.

The IPO last week was priced at the bottom end of the revised range of HK$13.30-15.20 a share. Even then, the company had to rely on cornerstone investors such as Temasek, KIA and hedge fund Och-Ziff Capital Management to pick up nearly half of the offering.

Citic's performance doesn't bode well for other companies seeking to tap Hong Kong's capital markets. According to Reuters, the offering is the first of nearly $35 billion in share sales in Hong Kong and China scheduled for the coming months by financial companies, including Haitong Securities, New China Life and China Guangfa Bank.

The Citic IPO is the largest in Hong Kong since Prada raised $2.5 billion in June. There was no listing activity in much of August and September and, in the past two weeks only five companies apart from Citic have successfully raised funds. These include General Atlantic-backed tea company Tenfu Holdings.

Fitness First, a portfolio company of European PE house BC Partners, is among the many firms to have cancelled or postponed IPOs. BC planned to exit via a $1.6 billion IPO in Singapore but is now said to be looking for strategic buyers.

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• Topics
• Greater China
• Exits
• IPO
• China
• Exit
• Trade sale
• Temasek Holdings
• KIA
• General Atlantic
• BC Partners