Shares of Chinese toymaker Bloks Group surged as much as 82 per cent in their Hong Kong market debut after its initial public offering (IPO) attracted huge demand from retail and institutional investors.
The shares changed hands at HK$109.60 versus the IPO price of HK$60.35 when trading began at 9.30am local time, valuing the maker of Ultraman and Transformers figurines at HK$26.9 billion (US$3.5 billion). They traded at HK$90.60 at noon trading break, while the Hang Seng Index slipped 0.5 per cent.
The Shanghai-based firm raised HK$1.6 billion of net proceeds by selling 27.7 million shares to investors, pricing the IPO at the top end of the HK$55.65 to HK$60.35 range, according to exchange filings.
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Retail investors in Hong Kong submitted orders for 6,000 times the shares allocated to them, making it the second hottest IPO in the city since media publisher Most Kwai Chung attracted 6,289 times of subscription in its IPO in 2018. Bids from global funds reached 38.6 times, Bloks said.
“Investors took note of the success in other companies in the toy and retail sectors,” said Dickie Wong, executive director at Kingston Securities. The stock exchange’s shortened IPO settlement cycles may have also helped create a “buying rush phenomenon”, he added.
Bloks is riding on the popularity seen in other Chinese retailers. Pop Mart’s trendy toy Labubu has enjoyed big success globally, helping power a 330 per cent rally in its Hong Kong-listed shares in the past year. Revenue at budget variety goods retailer Miniso Group has also risen on the back of collaborations with global brands like Harry Potter, Disney and Barbie.
Goldman Sachs and Huatai International were the IPO sponsors. Greenwoods Asset Management Hong Kong and UBS Asset Management were among the cornerstone investors.
Bloks plans to use the IPO proceeds to enhance research and development in product designs, invest in production resources and enrich its intellectual properties in its portfolio.
Despite rapid growth in revenue in recent years, Bloks has been unprofitable since at least 2021, according to its prospectus. Its losses widened 24 per cent to 254.9 million yuan (US$34.8 million) in the first six months of 2024, compared to the same period in 2023.
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