[HONG KONG] Shares in Hong Kong restaurant chain operator Dining Concepts Holdings Ltd, which counts the son of China's richest man among its shareholders, surged as much as 17 times on its first day of trading on Friday.
Dining Concepts and its shareholders raised HK$90 million (S$16 million) through the offer on Hong Kong stock exchange's Growth Enterprise Market (GEM), with the top 25 investors taking up almost 95 per cent of the total shares sold, regulatory filings showed.
GEM offers an opportunity to invest in "high growth, high risk" businesses. The Hong Kong stock exchange has been trying to improve governance and disclosure standards in this segment of the market. "There is a clear 'buyer beware' approach, there's a clear disclosure of the concentration," David Webb, a Hong Kong corporate governance activist said. "This will always happen in small, tightly-held companies and this is one of them."
In a regulatory filing last week, the company said "the concentration of shareholders may affect the liquidity of the shares," and advised investors to exercise caution when dealing.
Company officials were not immediately available for comment.
Prometheus Capital, owned by Wang Sicong, son of Chinese billionaire and founder of Dalian Wanda Group Wang Jianlin, holds a 10.1 per cent stake in Dining Concepts, regulatory filings showed.
The shares rose as high as HK$8.02 and closed at HK$4.3, compared to the IPO price of HK$0.45. Friday's surge took the market value to HK$3.4 billion, according to Reuters calculation. "The disclosure which has been made is always made in these cases.. (it) is an adequate approach to warning the market, but if they choose to buy this they are gambling," Webb said, referring to stock market investors.
Quam Capital was the sole sponsor of the IPO. This week, Hong Kong securities market regulator fined Quam Capital HK$800,000 for failing to discharge its duties as a sponsor in relation to the listing of Gayety Holdings in 2011. Gayety later changed its name to Food Idea Holdings Ltd.