A close-up of one of two IMAX cameras at the Smithsonian National Air and Space Museum in Washington. Shares in the Chinese unit of IMAX Corp and China Re rose sharply in their Hong Kong trading debuts yesterday.
Reuters/Hong Kong
Shares in the Chinese unit of IMAX Corp and the world’s biggest manufacturer of bras surged in their Hong Kong trading debuts yesterday, a sign of reviving market confidence that bodes well for upcoming larger IPOs.
After taking a beating in the latest quarter, the Hong Kong IPO market will be tested in the next few weeks as distressed debt manager China Huarong Asset Management Co and China Reinsurance (Group) press ahead with offerings worth a combined $5bn.
A source with direct knowledge of China Re’s IPO plans said that a strong response from investors this week had allowed the country’s biggest reinsurer to set an indicative price range for the deal which will be launched on Monday.
Shares in IMAX China Holding jumped 10.5% while Regina Miracle International (Holdings) which makes lingerie for global brands like Victoria’s Secret and Calvin Klein, soared 16.1%.
“This is very, very positive. It should help all these companies that were waiting on the sidelines to go and get their deals to market,” said a Hong Kong-based equity capital markets banker who was not authorised to speak publicly on the matter.
The Huarong and China Re offers had received regulatory approval weeks ago but pitches to investors had been delayed after a steep sell-off in Chinese equities this year and turmoil in other global share markets.
The source said China Re would offer shares in an indicative range equivalent to a forecast price-to-book ratio of 1.12 to 1.3 times for 2015. That’s above a ratio of 0.9 for Munich Re, the world’s largest reinsurer. IMAX China and Regina Miracle raised a combined $460mn in their IPOs – some of the first offerings after a long drought.
IPO activity tumbled 36% in Hong Kong in the first nine months of 2015 from a year ago as concerns grew over a slowdown in China’s economy and higher interest rates in the US.
For the third-quarter, proceeds from equity deals in Asia Pacific sank 57% from the second-quarter, with the value of IPOs falling to its lowest level since March 2013, Thomson Reuters data showed.
IMAX China said its business has grown strongly, despite the economic slowdown, with the average box office revenue per screen in Greater China up nearly 33% in the first-half of 2015 from the same period last year.
“While the economy, there have been things going on, our businesses remain quite robust. Not just our business, but the whole sector overall,” Jim Athanasopoulos, IMAX China chief financial officer, said at the listing ceremony.
