Zhongji Innolight prices HK IPO at 980 HKD, Hong Kong's largest since 2019

Zhongji Innolight priced its Hong Kong initial public offering at 980 Hong Kong dollars per share, a 3% discount from the top-end guidance, according to people familiar with the matter. The deal is valued at about 53.4 billion HKD ($6.8 billion), making it the city's largest listing since Alibaba Group's $12.9 billion IPO in 2019.

"The strong demand reflects global investor appetite for AI infrastructure plays," a person close to the deal said. The company closed institutional books one day early last Friday after receiving orders multiple times the shares on offer, with global long-only funds, sovereign wealth funds and China-focused funds covering the entire deal size in early indications.

The 980 HKD offer price represents a roughly 19% discount to Zhongji Innolight's A-share close of 1,046.51 yuan on the Shenzhen Stock Exchange last Friday. The company's A-shares traded at 1,034.77 yuan on Tuesday, giving it a market capitalization of 1.15 trillion yuan ($158 billion). With the over-allotment option, the deal could expand to about 61 billion HKD ($7.8 billion).

Zhongji Innolight is a core supplier of optical modules used in data centers that power artificial intelligence computing. The company plans to use the proceeds for research and development, capacity expansion, supply chain improvements, mergers and acquisitions, and working capital. The listing underscores a wave of Chinese AI supply chain companies tapping Hong Kong for fundraising, with the city's IPO proceeds on track to hit a six-year high in 2025.

The Hong Kong Stock Exchange will launch individual stock options for Zhongji Innolight on the same day as its debut, according to a HKEX notice on July 27. The exchange typically introduces options for large-cap listings to meet institutional hedging demand. The company is scheduled to begin trading on the Main Board on Thursday, July 30.

Goldman Sachs, China International Capital Corp., Morgan Stanley and GF Securities are the joint sponsors and lead underwriters. Haitong International, Citigroup, HSBC and China Galaxy Securities also participated in the deal.

The pricing gives Zhongji Innolight an enterprise value that positions it at a premium to some global optical component peers, though the 19% A-share discount may create cross-market arbitrage dynamics. First-day trading on Thursday will test whether institutional demand translates into sustained secondary market support.

This article is for informational purposes only and does not constitute investment advice.