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Zhongji to repurchase shares ahead of Hong Kong debut after sell-off

The buy-back is sized at 4 billion to 8 billion yuan, aimed at reducing the risk that its Hong Kong listing trades below its IPO offer price.

Reported · Written up by our desk · North America

Zhongji Innolight will repurchase its Shenzhen-listed shares for between 4 billion and 8 billion yuan (about US$1.2 billion) in the run-up to its Hong Kong debut, with the company saying it will use its own funds or borrow to finance the plan.

SCMP Economy reported the repurchase comes just two days before the company’s high-profile Hong Kong IPO, after a sell-off in its onshore yuan-denominated stock brought it close to the Hong Kong offer price of HK$980.

The outlet said further weakness in the mainland share price could increase the risk that Zhongji’s Hong Kong-listed shares fall below the IPO price on the first day, potentially complicating the company’s effort to expand overseas and build a profile with global investors.

SCMP Economy also cited Huichen Asset Management fund manager Dai Ming, who said the timing suggests the buy-back is intended to bolster sentiment before trading starts in Hong Kong, where offshore investors can use the yuan-traded stock as a reference for pricing.

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