Chinese biopharma firm Wuxi XDC climbs 31% on debut in Hong Kong

A CHINESE maker of drugs used in cancer treatments surged in Hong Kong after an initial public offering (IPO) priced at the top of a marketed range, a rare case of strong demand for a listing in the financial hub this year. Shares of WuXi XDC Cayman gained 31 per cent at the open to HK$26.95. The biopharmaceutical company raised HK$3.68 billion (S$636 million) from the share sale, with the stock priced at HK$20.60 apiece compared with a starting level of US$19.90. It’s the first among 14 listings larger than US$100 million in the city this year that was priced at the highest indicated value, Bloomberg-compiled data showed. Interest in the offering compares with a subdued market for new share sales in Hong Kong, where proceeds are so far down 59 per cent compared with the same period last year as high-interest rates and China’s economic woes deterred investors. The tranche restricted to individuals saw 50 times higher demand than the number of shares available, according to a statement to Hong Kong’s exchange this week. That triggered a so-called “claw-back mechanism”, under which a portion of shares allocated to funds had to be made available to retail investors. Large, global buyers also lined up, with seven cornerstone investors committed to an aggregate amount of US$300 million in shares, or about 64 per cent of the offering. They include General Atlantic Singapore and Al-Rayyan Holding, a unit of Qatar Investment Authority. The quality of cornerstone investors was “strong”, said Clarence Chu, an analyst at Aequitas Research who publishes on the platform Smartkarma. Some are “renowned for their healthcare focus, as opposed to the sovereign-owned enterprise funds seen in previous HK listings over the past year”, Chu wrote in a note. While a strong debut by WuXi XDC could revive interest in the city’s IPO market, sentiment is not encouraging. The 30-day average trading turnover on Hong Kong’s main board is close to the lowest level since January 2020, Bloomberg compiled data shows. Of the 13 debuts larger than US$100 million this year prior to WuXi XDC, only five are trading above their IPO price. Last month, the city announced efforts to encourage activity in equities trading, including lowering the stamp duty on stock transactions to 0.10 per cent from 0.13 per cent, a reversal of an increase at the height of the pandemic in 2021. The debuting company, a unit of Hong Kong-listed pharmaceutical company WuXi Biologics, plans to use most of the funds raised to construct new facilities in Singapore and grow production capacity in China, according to terms of the deal. BLOOMBERG