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GAMING tech firm Razer is said to have priced its initial public offering (IPO) at HK$3.88 (S$0.68) a share, near the top end of its indicated price range on the back of strong interest from Hong Kong's retail investors.
Razer had tested a pricing range of between HK$2.93 and HK$4 a share during its investor roadshows. The price is now set at HK$3.88 apiece, Bloomberg reported on Nov 7 citing sources.
The Hong Kong public tranche was 289 times over-subscribed with 21 million people placing orders, local media reported. This compares with Tencent's China Literature, which was 623 times over-subscribed and IPOs on Wednesday. ZhongAn Online P&C Insurance Co, which listed in September, was 393 times over-subscribed.
Razer's IPO size is 1.06 billion shares. Of this, 10 per cent was offered to the Hong Kong public. The other 90 per cent was offered through an international placement, targeting mainly institutional investors and high net worth individuals, including those in Singapore. Both tranches closed on Monday.
Because the retail allocation was more than 100 times subscribed, under Hong Kong's clawback mechanism, 50 per cent of the IPO tranche will be allocated to the public, instead of the 10 per cent initially on offer.
The institutional tranche, which was also over-subscribed, has been reduced to 50 per cent.
Ke Yan, an insight provider on Smartkarma, told The Business Times: "I think Hong Kong investors buy the Li Ka-shing story. To comprehend the enormous over-subscription ratio, one should also understand that there is a subtle difference between Hong Kong and Singapore's public tranche.
"In Hong Kong, retail investors can use broker-facilitated leverage to subscribe to IPOs which is an important tool for hot deals like this. Even with such leverage facilities, a retail investor might just get allocation of one lot (1,000 shares) in most cases."
Hong Kong's richest man, Mr Li, is one of Razer's early backers. The company's name in Mandarin is "Thunder Snake" and its list of cornerstone investors is not short of star power, including names like GIC.
Mr Ke noted, however, that Razer is expensive based on mainstream valuation metrics.
Razer sells laptops and premium gaming peripherals such as high-precision mice and customisable keyboards. The United States is its biggest market, accounting for half of group revenue.
Based on an IPO price of HK$3.88 a share, Razer would be valued at HK$34.4 billion (or US$4.4 billion), assuming that the over-allotment option for 160 million shares is not exercised.
Mr Ke wrote in a note last week: "Razer's valuation is higher than global computer peripherals leader Micro-Star International (market cap: US$2 billion) and two-thirds that of established laptop manufacturer Asustek. The Lenovo Group is valued at US$6.5 billion. Yet Lenovo's revenue is 100 times Razer's revenue."
The Razer Phone, launched last week in the company's first foray into the mobile device market, has also drawn mixed reviews. "Chance is high that it could take a few iterations for Razer to get its mobile phone right," said Mr Ke.
Razer plans to commence trading on the Hong Kong bourse on Nov 13. The Hong Kong public offering was only open to those with a Hong Kong address but Singapore retail investors can trade the shares from the day of the IPO.