China Literature IPO raises US$1.1b amid heavy demand, stellar debut expected

[HONG KONG] An IPO for China Literature , Tencent Holdings' online publishing arm, has raised US$1.1 billion with the retail portion gathering demand that was 625 times the number of shares on offer, setting the stage for a sterling debut on Wednesday.

The offering for China's biggest e-book company priced at the top of its marketed range of HK$48-HK$55 (S$8.41-S$9.64) range, Tencent said in a statement, confirming a report from Thomson Reuters IFR last week.

Tencent added that the international portion of the offering was "very significantly over-subscribed." "A hefty gain is expected, with the grey market price shooting as high as HK$77," said Steven Leung, a sales director at UOB Kay Hian brokerage in Hong Kong. That represents a jump of about 40 per cent over its IPO price.

"China Literature is attractive as it has quite a sound business model and is a platform that is making money with a solid foundation. But still the valuation is way too high, in particular compared with its parent," he said.

China Literature, which is 62 per cent owned by Tencent , has a business akin to Amazon.com Inc's Kindle Store, operating a platform with 9.6 million literary works from 6.4 million authors.

Private equity firm Carlyle Group LP owns 12.2 per cent of China Literature while Trustbridge Partners, a private equity firm founded by Shujun Li, the former CFO of Shanda Interactive, holds 6 per cent.

The listing comes some six weeks after the debut of ZhongAn Online Property & Casualty Insurance Co, which jumped 18 per cent on its first day of trade and is now up almost 30 per cent over its IPO price, boosting Hong Kong's hopes of luring future Chinese technology start-ups.

Razer Inc, a gaming hardware maker backed by Intel Corp and Hong Kong billionaire Li Ka-shing, has priced its IPO near the top end of the range, raising HK$4.12 billion, IFR reported on Tuesday.

REUTERS