Key Takeaways:
Zhongji Innolight plans to raise at least $8 billion in a Hong Kong IPO, putting it on track to be the city's largest listing since Alibaba in 2019.
"The company has been the world's largest optical interconnect solutions provider by revenue for five straight years since 2021," the company said in its draft prospectus, citing consultant CIC.
The Shenzhen-listed company will sell shares at a price of up to HK$1,010 ($128.81) each, a 13.2% discount to its Shenzhen stock's closing price on Monday. Its shares have jumped about 86% year-to-date. The company posted first-quarter revenue of 19.5 billion yuan ($2.9 billion), up 192% from a year earlier, while profit surged 274% to 6.32 billion yuan.
The deal will be Hong Kong's largest first-time share sale since Alibaba Group raised $12.9 billion in 2019 and the second-largest listing in Asia this year after Chinese chipmaker CXMT Corp's $8.6 billion IPO on Shanghai's STAR market. Hong Kong new listings have raised $33.8 billion so far this year, more than double the $16.4 billion raised in the same period a year earlier, LSEG data show.
BlackRock Inc., Hillhouse Investment and Temasek Holdings Pte are set to be among cornerstone investors in the offering, according to people familiar with the matter. Investment firms Aspex Management, JPMorgan Asset Management, Wellington Management Co. and Jack Ma-backed Yunfeng Capital Co. are also planning to participate, the people said. Goldman Sachs, China International Capital Corp, Morgan Stanley and GF Securities are leading the sale, with Citigroup and HSBC also on the deal.
Zhongji makes optical transceivers, small devices that convert electrical signals into light signals and back again, enabling data movement through fiber-optic cables in data centers, cloud networks and AI computing systems. The United States was its largest market, accounting for 61.7% of revenue in the three months ended March 31. The company plans to use listing proceeds for research and development, global production expansion, supply-chain strengthening, acquisitions and working capital, its prospectus showed.
The pricing gives the company a valuation that will be tested against sector peers such as Eoptolink Technology, which is lining up its own Hong Kong listing of up to $5 billion. First-day trading will gauge institutional demand for AI infrastructure plays amid a recent pullback in chip stocks, with Zhongji's Shenzhen shares trading about 27% below their June peak.
This article is for informational purposes only and does not constitute investment advice.
