[HONG KONG] Shares in the Chinese unit of IMAX Corp and the world's biggest manufacturer of bras surged in their Hong Kong trading debuts on Thursday, a sign of reviving market confidence that bodes well for upcoming larger IPOs.
After taking a beating in the latest quarter, the Hong Kong IPO market will be tested in the next few weeks as distressed debt manager China Huarong Asset Management Co Ltd and China Reinsurance (Group) pitch offerings worth a combined US$5 billion.
The offers had received approval weeks ago but pitches to investors had been delayed after a steep sell-off in Chinese equities this year and turmoil in other global share markets.
Shares in IMAX China Holding Inc jumped 7.1 per cent to HK$33.20. Regina Miracle International (Holdings) Ltd which makes lingerie for global brands like Victoria's Secret and Calvin Klein, soared 14.1 percent higher than its IPO price. "This is very, very positive. It should help all these companies that were waiting on the sidelines to go and get their deals to market," said a Hong Kong-based equity capital markets banker who was not authorised to speak publicly on the matter.
IMAX China and Regina Miracle raised a combined US$460 million in their IPOs - some of the first offerings after a long drought.
IPO activity tumbled 36 per cent in Hong Kong in the first nine months of 2015 from a year ago as concerns grew over a slowdown in China's economy and higher interest rates in the United States.
For the third quarter, proceeds from equity deals in Asia Pacific sank 57 per cent from the second quarter, with the value of IPOs falling to its lowest level since March 2013, Thomson Reuters data showed.
IMAX China said its business has grown strongly, despite the economic slowdown, with the average box office revenue per screen in Greater China up nearly 33 per cent in the first half of 2015 from the same period last year. "While the economy, there have been things going on, our businesses remain quite robust. Not just our business, but the whole sector overall," Jim Athanasopoulos, IMAX China chief financial officer, said at the listing ceremony.
Morgan Stanley was the sole sponsor of the IMAX China IPO, while China International Capital Corp and Goldman Sachs were also joint bookrunners. The underwriters stand to earn a combined US$8.3 million in fees from the deal, equivalent to a 3 per cent underwriting commission.
Morgan Stanley was also the sole sponsor of the Regina Miracle IPO, with Citic CLSA acting as joint bookrunner. The banks stand to jointly earn up to US$9.6 million in commissions from the deal, equivalent to a 3.5 per cent underwriting fee and a 1 per cent incentive fee, according to the IPO prospectus.