Kuaishou trades at twice IPO price in gray market

[BEIJING] Institutional investors are buying Kuaishou Technology's Hong Kong shares before its Friday debut at a significant premium to the listing price, underscoring the high level of demand for the world's biggest internet initial public offering in two years.

Some trades were executed for HK$250 (S$42.9) apiece in gray-market trading Monday, according to people familiar with the matter, who asked not to be identified as they are not authorised to speak to the media. That's more than double the listing price of HK$115 and a bigger premium than the 50 per cent jump on Ant Group's planned Hong Kong offering before it was scrapped.

If Kuaishou's shares rise as much on Friday it would be the third-best debut for an IPO over US$1 billion in Hong Kong on record, data compiled by Bloomberg show.

An external representative for Kuaishou declined to comment.

In a so-called gray market, investors can bid for new shares before they officially start trading on a stock exchange. The over-the-counter mechanism is often seen as an early indicator of investor demand for an IPO's debut. Retail buyers will be able to trade through a similar channel a day before Kuaishou begins trading on Friday.

The short-video app company, which is backed by Tencent Holdings, sold 365 million shares at HK$115 apiece, according to terms for the deal obtained by Bloomberg News. The share sale values the rival to ByteDance at US$60.9 billion.

Kuaishou's IPO proved a major hit with both institutional and retail investors, with the latter putting in orders worth US$165 billion, a record for the city.

BLOOMBERG