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UPDATE 1-CITIC-backed broker CSC Financial makes flat HK debut
December 9, 2016 / 2:57 AM / a year ago

UPDATE 1-CITIC-backed broker CSC Financial makes flat HK debut

* CSC Financial IPOs had tepid demand from retail investors

* Hong Kong IPO activity down in 2016 from 2015 (Adds details of Hong Kong IPO markets and new issue performances)

By Elzio Barreto

HONG KONG, Dec 9 (Reuters) - Shares in CSC Financial Co Ltd made a flat trading debut in Hong Kong on Friday, after China’s busiest IPO underwriter raised $993 million in a stock offering that attracted little interest from the city’s retail investors.

CSC Financial’s IPO caps a tough year for Hong Kong listings, with deal volumes down by a fifth, despite the city remaining poised to hold its position as the world’s top IPO venue.

Even investors betting on the large-cap IPOs have had a difficult year, with all six deals that exceeded $500 million trading below their listing price, down an average of 7.3 percent. Volatility in global markets, concerns over higher U.S. interest rates and a slowdown in China’s economy all weighed on investor appetite for local shares.

CSC Financial, partly owned by China’s top brokerage CITIC Securities Co Ltd , dipped to HK$6.80 in mid-morning trading, compared with its HK$6.81 IPO price. The benchmark Hang Seng index was down 0.4 percent.

The IPO consisted of 1.13 billion shares, including 1.08 billion new shares and 53.8 million shares sold on behalf of China’s National Council for Social Security Fund (NSSF), according to the offering prospectus. The shares were marketed in a HK$6.36 to HK$7.26 indicative range.

While Hong Kong has kept its post as the world’s IPO capital, new listings have fallen for a second straight year. The city has hosted 64 IPOs collectively valued at $19 billion so far in 2016, down from $24.2 billion from 84 deals in 2015, Thomson Reuters data showed.

Demand from retail investors - who have a significant influence over Hong Kong’s IPOs first day trading - accounted for just 0.97 times the number of shares on offer in the CSC Financial deal, the company said in a securities filing on Thursday, while the institutional tranche was well oversubscribed.

Despite tepid demand from “mom-and-pop” investors, the deal got the backing of 10 “cornerstone investors” - institutions who commit to holding shares for at least six months and help guarantee initial demand before IPOs are launched.

The group of investors, including CITIC Ltd, Taiping Life Insurance Co Ltd and Daiwa Securities, agreed to buy 60 percent of the shares on offer, according to the prospectus. (Reporting by Elzio Barreto; Editing by Richard Pullin and Sam Holmes)

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