A management firm that represents Chinese celebrities is the first this year to suspend an initial public offering in Hong Kong after having started to take orders for its shares, evidencing a valuation disconnect at a dire moment for IPOs globally.
(Bloomberg) — A management firm that represents Chinese celebrities is the first this year to suspend an initial public offering in Hong Kong after having started to take orders for its shares, evidencing a valuation disconnect at a dire moment for IPOs globally.
YH Entertainment Group, backed by Alibaba Group Holding Ltd., opened books to investors last week for a listing of as much as $140 million. It was poised to price the shares on Aug. 31 and slated to debut next week. The company pulled the deal as investor interest didn’t meet its valuation expectations, Bloomberg News reported on Thursday.
It’s the latest company to shelve plans for an offering in the Asian financial hub at that point of the IPO process after Better Home Group Holdings Co. scrapped its offering in the last quarter of 2021, according to data compiled by Bloomberg.
Hong Kong’s IPO market, alongside major global venues, has been quelled by headwinds including high inflation, rising interest rates and fears of a slowing global economy. Proceeds raised in Hong Kong this year are about 80% lower than a year earlier. Still, small to mid-size offerings have endured, with many pricing at the bottom of their range and trading below water after debuting.
Some issuers looking at first-time share sales in the city have stalled offerings at a much earlier stage. Chinese battery maker CALB Co. is delaying seeking stock exchange approval that had been expected this week for an IPO planned to be as large as $2 billion.
Other delayed big-size deals in the city include PAG, the Asia-focused private equity firm backed by Blackstone Inc., and FWD Group Holdings Ltd., the Asian insurer backed by billionaire Richard Li. Changes in plans were also registered from Mumbai to Tokyo last month.
In South Korea, which saw a surge in tech offerings last year, several IPOs were pulled after bookbuilding. In May, security-services provider SK Shieldus Co. and app-operator One Store Co. pulled their sales within the space of a week because of difficulties in obtaining acceptable valuations. Another three companies have also removed their IPOs in Seoul this year, Bloomberg-compiled data show.
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