Chinas Bottled Water Maker Nongfu Spring Pops 54% In HK Debut

Chinese bottled water and drinks producer Nongfu Spring Co Ltd shares closed 54% up on their first trading day on Tuesday, in one of the best debut performances for a $1 billion-plus initial public offering (IPO) in Hong Kong on record.

The stock opened 85.3% higher than its IPO price of HK$21.50 each before retreating.

Nongfu‘s shares ended at HK$33.10, ranking it fourth behind the now-delisted alibaba.com, Smoore International and China Literature in terms of first day gains for companies that raised more than $1 billion in their IPOs on the exchange, according to Refinitiv data.

It was the third most traded stock on the Hong Kong market behind on-demand service apps provider Meituan and Tencent by turnover with HK$8.14 billion ($1.05 billion) worth of stock changing hands, Refinitiv data showed.

The performance augurs well for other planned IPOs, including financial technology firm Ant Group’s dual Hong Kong-Shanghai listing worth up to $30 billion, which could come as soon as next month, Reuters reported citing sources.

Nongfu is China’s leading bottled water producer and a top-three player in the bottled tea and juice market, according to its prospectus.

The firm raised $1.1 billion in its Hong Kong IPO, pricing its shares at HK$21.50 apiece, at the top end of their indicative range.

The benchmark Hang Seng Index was up 0.14% on Tuesday.

“I would say we are seeing some institutions who did not get an allocation in the international placement looking to buy the stock on the market,” said Steven Leung, UOB Kay Hian institutional sales executive director.

The high valuation makes it unlikely the share price will continue to perform as well, Leung said.

Nongfu sold 388.2 million shares. Five cornerstone investors, led by fund manager Fidelity, hedge fund Coatue and Singapore sovereign wealth fund GIC, took stock in the deal.

The IPO was hotly contested with the retail component of the deal 1,148 times over-subscribed, and institutional demand 60 times over subscribed, showed documents lodged with the Hong Kong stock exchange.

The level of retail investors demand was worth HK$670 billion ($86.45 billion), according to the documents, which eclipsed the previous record in Hong Kong held by the 2008 IPO of China Railway Construction Corp <1186.HK>.

Reuters