Retail investors have applied to borrow nearly US$60 billion to participate in Bloks Group’s upcoming Hong Kong initial public offering (IPO), highlighting strong demand for new listings.
According to data from TradeGo displayed on the Futu trading application, individual investors have sought to borrow funds to bid for over 3,000 times the number of shares allocated to them at the upper end of the IPO’s price range. As of 12:20 PM (Hong Kong time) on Thursday, January 2, investors had applied to borrow HK$451 billion (approximately S$79 billion) through brokerages.
Bloks Group, a Chinese toymaker that specializes in assembly-character toys, began taking investor orders on December 31 and is scheduled to list its shares on January 10. The company is offering 24.1 million shares in the IPO, aiming to raise up to HK$1.5 billion. Local retail investors have been allocated 10% of the shares.
Market participants are generally expecting a better year for Hong Kong IPOs. In 2024, some IPOs saw substantial interest from retail investors, with high subscription multiples seen in smaller deals. For instance, the IPO of Chinese courier SF Holding raised US$749 million, attracting about 79 times the subscription for its retail tranche. Similarly, health-supplement company Herbs Generation Group Holdings’ US$16 million listing saw over 6,000 times the subscription for its retail tranche. Both companies triggered the “clawback mechanism,” which increased the allocation to retail investors.
The Hong Kong Stock Exchange is currently reviewing its IPO requirements in a market consultation, with the clawback mechanism being a key focus. Under current rules, mom-and-pop investors can receive up to 50% of the shares in a deal when subscription levels exceed a certain threshold. However, the exchange is considering a reduction of this limit to 20% if issuers reserve 5% of the shares for the public. The mechanism has been a point of contention for investment bankers in Hong Kong, who argue that it limits the amount of stock available for institutional funds during high-demand IPOs.
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