China Literature, the country’s largest online publishing and e-book website, has priced its initial public offering at the top end of a price range, as investors overbought its shares by more than 600 times in the hope of getting in early on what could turn into another internet star like its parent Tencent Holdings.
China Literature’s shares will begin trading in Hong Kong for the first time on Wednesday at HK$55 each, which prices its offer at HK$8.3 billion (US$1.06 billion), making it the city’s second-biggest stock sale by an internet company this year. Investors submitted bids to buy 9.48 billion shares, or 625 times more than what the company had on offer.
It means the IPO has locked in investor capital of more than HK$520 billion, the second largest in Hong Kong IPO history, after China Railway Construction’s HK$535 billion in 2008.
At stake is the hope that the stock price of China Literature, which has an archive of 9.6 million volumes of work produced by 6.4 million writers in a business model similar to Amazon’s Kindle Store, will turn into another Amazon, or Tencent. Amazon’s stock price rose 0.8 per cent Monday in New York to US$1,120.66, valuing the company at US$540 billion. Tencent’s shares rose 3 per cent Tuesday to HK$388.80, giving the company US$473 billion in capitalisation.
Among the 103,352 retail bidders who have subscribed for one lot of 200 shares per person, fewer than 8,000 were successful in getting their hands on China Literature’s stock, with each person allocated a single lot.
Still, the enthusiasm for China Literature broke the record set by ZhongAn Online Property & Casualty Insurance, the city’s largest technology IPO of 2017, which was overbought by 391 times.
ZhongAn’s shares soared as much as 57 per cent within six days of its September 27 debut, easing 0.5 per cent on Tuesday to HK$76.45.
“This…