China’s NetEase Looks To Raise $2.72B In Hong Kong Offering

Chinese internet giant NetEase is set to issue 171,480,000 shares on June 11 as part of a secondary offering of stock, the company said in a release. News reports said the pricing will be set at HK$123 per share.

NetEase, a major internet and gaming company, is part of a trend of Chinese firms, including Alibaba, listing on the Hong Kong stock market. Last year in Hong Kong, Alibaba launched a major secondary listing, meaning the Asian financial hub is not the company’s primary stock exchange.

According to CNBC, China’s JD.com is planning its own stock sale for later this year. Several years ago, the Hong Kong stock exchange made it more difficult to hold such sales, but the rules have now been changed to make it much easier.

In the background are rising tensions over a range of issues between the U.S. and China, including trading practices and Hong Kong’s democratic freedoms. Proposed legislation in the U.S. Congress calls for ramping up scrutiny of Chinese companies.

NASDAQ-listed NetEase hopes to raise $2.72 billion with the stock offering.

NetEase’s investment banks will be able to issue an additional 25,722,000 shares at the same price as the secondary offering. China International Capital Corp., Credit Suisse and J.P. Morgan are the sponsors for the Hong Kong listing.

The company said that 25 ordinary shares are worth one NASDAQ-listed American depositary share, or ADS. That puts the Hong Kong offer price at about $397 per ADS.

At the same time, the U.S. market for initial public offerings (IPOs) is starting to show signs of life. On June 4, Vancouver, Washington-based ZoomInfo Technologies completed a major IPO, issuing 44.5 million shares initially. While the company priced its shares at $21, at one point the stock doubled to $42 that very day. The stock is trading somewhat higher this week (June 8).