March 6, 2020 / 4:27 PM / a month ago

Chinese TV producer pioneers 'virtual' roadshow for Hong Kong float: sources

HONG KONG (Reuters) - Television producer China Bright Culture Group 1859.HK has raised $116 million in a Hong Kong share offering without any of the usual face-to-face meetings, a strategy others are likely to follow to deal with coronavirus fears, sources said on Friday. 

FILE PHOTO: The name of Hong Kong Exchanges and Clearing Limited is displayed at the entrance in Hong Kong, China January 24, 2018. REUTERS/Bobby Yip/File Photo

Bright Culture sold 400 million shares at HK$2.25 each, pricing the deal at the bottom of a marketing range of HK$2.25 to HK$3.37 per share ($0.29 to $0.43), two people with direct knowledge of the matter said.

The initial public offering (IPO) is the first $100 million-plus float in the Asian financial center to go online to this extent and provides a template for other IPO hopefuls should the coronavirus epidemic continue to limit travel, particularly for mainland-based Chinese.

Face-to-face meetings between executives and investors are a cornerstone of the IPO process worldwide and often involve company executives and their advisers going on week-long meeting-packed tours of major financial centers such as Hong Kong, Singapore, London and New York.

But Beijing-based Bright Culture, which launched its offering on Feb 27, has not held any in-person meetings, instead communicating with investors via between four and eight video or telephone conference calls per day, said one of the sources.

Meetings are particularly important in Asia, where exchanging name cards is a more formal and significant part of business gatherings than in centers such as New York or London.

“There’s no traditional investor luncheon or chance to exchange name cards with the executives. But the virtual roadshow turns out to be working and can actually let more people from both side join the calls,” said the person.

The company, which also held an online press conference for media last Thursday, has secured one cornerstone investor - China Fortune Rich Private Equity Fund which is pledging $10 million.

Bright Culture declined to comment.

Several equity capital markets bankers said more IPO candidates are poised to follow Bright Culture’s virtual roadshow template in the coming weeks.

Among them are Chinese biotech firm InnoCare Pharma which is seeking between $200 million and $300 million in a Hong Kong IPO. It has been pre-marketing its deal online since Monday, through video and telephone calls, said two other people.

InnoCare Pharma declined to comment.

Bright Culture produces and distributes shows including variety programs and drama series for TV networks and online video platforms.

It mainly counts on the success of a limited number of video programs for its income. It recorded 223 million yuan and 47 million yuan in revenue and net profit, respectively, for the first eight months of 2019, down 13% and 34% over the same period in 2018.

Its shares will start trading on March 13.

BoCom International and Haitong International are the sponsors of the float.

Reporting by Julie Zhu; Editing by Jennifer Hughes and Elaine Hardcastle

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