Chinese home appliance powerhouse, Midea Group Co., successfully raised $4 billion in its Hong Kong initial public offering (IPO), capitalizing on robust investor demand. The deal, Hong Kong’s largest share sale in over three years, saw the company price its shares at the upper end of the marketed range, demonstrating a solid appetite for the listing.
Based in Foshan, China, Midea offered its shares at HK$54.80 each, as confirmed in a statement to the Hong Kong stock exchange on Friday. This IPO, scheduled to list on Tuesday, was initially set to sell 492.1 million shares. However, due to strong interest, Midea exercised an option to increase the offering by 15%, ultimately selling 566 million shares.
The listing could potentially expand further to $4.6 billion if an overallotment option, or “greenshoe,” is exercised. Cornerstone investors, who agree to hold their shares for at least six months, purchased $1.26 billion worth of shares—representing more than one-third of the offering. Major backers include a subsidiary of Cosco Shipping Holdings Co. and a division of UBS Asset Management AG.
Midea had initially marketed the shares in a range of HK$52 to HK$54.80 per share, as indicated in its listing document. Given the overwhelming demand, order books were multiple times oversubscribed, and the closing of subscriptions occurred a day earlier than expected, sources familiar with the matter shared.
Notable institutional investors, such as Hillhouse Investment, Singaporean sovereign wealth funds GIC Pte, and Temasek Holdings Pte, also showed interest in Midea’s listing, according to reports from Bloomberg News.
With the $4 billion raised, Midea’s IPO becomes Hong Kong’s largest since Kuaishou Technology’s $6.2 billion offering in 2021. Despite the high interest, Midea priced its Hong Kong shares at a roughly 20% discount to its Shenzhen-listed stocks, adding to its attractiveness.
Expanded Analysis:
From an investment perspective, Midea’s listing presents a compelling opportunity for investors seeking exposure to China’s robust consumer market. The appliance industry is experiencing stable demand driven by urbanization, middle-class growth, and increased home ownership in China. The company’s strong fundamentals, including its expansive product portfolio and global reach, further amplify the appeal.
For cornerstone investors like Cosco Shipping and UBS Asset Management, the decision to lock in their positions for six months reflects confidence in Midea’s long-term growth trajectory. With the offering’s oversubscription, investors who participated early in the IPO could stand to benefit from an initial price surge, typical in highly anticipated listings.
Given the 20% discount to Midea’s Shenzhen-listed shares, investors who enter now could potentially capture value as the price normalizes. This discount provides room for upward movement in stock prices, particularly as demand for consumer electronics and appliances continues to rise, driven by post-pandemic recovery and global economic growth.
Furthermore, this IPO underscores Hong Kong’s position as a preferred listing venue for major Chinese firms seeking access to international capital markets. The success of Midea’s IPO could set the tone for future large-scale listings in the region, reaffirming investor confidence in Hong Kong’s market resilience.
Leave feedback about this