Shares of Horizon Robotics rose in their trading debut in Hong Kong on Thursday, though the initial listing euphoria was marred by a broader selloff in technology shares.
The stock soared almost 38% over its issue price of HK$3.99 in early trading, before cutting the bulk of its gain to finish just 2.8% higher. Market watchers attributed the move to profit-taking by some investors following the strong opening surge as well as to broad weakness in tech stocks in Hong Kong, where the Hang Seng Tech Index slid 2.6%.
“With tech stocks facing a risk-off sentiment as rates continued to rally last night, this volatility would have influenced Horizon Robotics,” said Mohit Mirpuri, a fund manager at Singapore-based SGMC Capital Pte. “Early profit-taking also played a role, as investors locked in gains from the sharp opening rise.”
The US$696 million ($918.33 million) IPO of Horizon, a Chinese provider of software and hardware for autonomous driving systems, saw strong demand. It was priced at the top of its marketed range and attracted investors such as Baillie Gifford & Co. and Norway’s sovereign wealth fund.
Sentiment toward Hong Kong’s IPO market is slowly improving, with shares of bottled-water company China Resources Beverage Holdings Co. jumping 15% on listing Wednesday. At US$8.7 billion, IPO proceeds in the city this year have already exceeded the tally for all of 2023, according to data compiled by Bloomberg.
As of Wednesday, Hong Kong IPOs generated an average first-day gain of 6.5% this year, according to data compiled by Bloomberg.
See also: Horizon Robotics’ shares jump 38% in HK after US$696 mil IPO
Self-driving tech remains a topic of interest, with Chinese firm WeRide Inc. relaunching its US IPO following a delay and fellow startup Pony.ai also filing for a US share sale. Likely inspired by Horizon Robotics’ performance, IMotion Automotive Technology Suzhou Co.’s stock advanced as much as 31% in Hong Kong Thursday to the highest in more than two weeks.
“The participation of many well-known international investors in its IPO and its autonomous driving business that’s benchmarked against Tesla boosted market sentiment toward the company, especially following Tesla’s strong results overnight,” said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co.
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HK Pipeline
Horizon Robotics’ listing joins Asia’s busiest IPO week in more than two years, with around 20 companies from the region making deals that may raise more than US$8 billion, according to data compiled by Bloomberg. This year’s proceeds in Hong Kong got a boost from last month’s listing by Chinese appliance maker Midea Group Co., which raised US$4.6 billion in what was the city’s largest listing in over three years.
Some big listings in the pipeline include those of Shanghai-listed Jiangsu Hengrui Pharmaceuticals Co., which is said to consider a second listing in Hong Kong as soon as next year that might raise at least US$2 billion, and Chery Automobile Co., which is also said to list in the city as soon as next year.
Foshan Haitian Flavouring & Food Co., one of China’s biggest condiment makers, is among those planning share sales in Hong Kong, Bloomberg has reported.
Founded in 2015, Horizon Robotics is controlled by Kai Yu, an artificial-intelligence scientist who used to work at Baidu Inc. and was instrumental in its push into autonomous driving. The company said it plans to use the IPO proceeds for purposes including research and development, future strategic investment into its joint ventures as well as sales and marketing.
Horizon Robotics’ customers include Audi, Hyundai Motor Co. and BYD Co.
Chinese tech heavyweights Alibaba Group Holding Ltd. and Baidu were among the four cornerstone investors that agreed to subscribe for about US$220 million in Horizon Robotics’ stock in the IPO.
The deal’s Hong Kong public offering tranche was 33.8 times subscribed, with the company boosting allocation of IPO shares to retail investors.
Chart: Bloomberg
