Fu Shou Yuan International Group Ltd., a Chinese developer of graveyards, soared on its Hong Kong trading debut as optimism the Federal Reserve will keep interest rates near record lows stoked demand for new equity.
The Shanghai-based company jumped 53 percent from its offer price at the noon trading break, heading for the biggest first-day gain for a Hong Kong initial public offering of at least $100 million since July 2009, according to data compiled by Bloomberg. Kerry Logistics Network Ltd. (636), Consun Pharmaceutical Group Ltd. (1681) and China Conch Venture Holdings Ltd. also rose on their Hong Kong debuts today.
“All the IPOs are up, it doesn’t matter whether it’s a donkey or a dog,” said Louis Tse, a Hong Kong-based director at VC Brokerage Ltd. “The Fed tapering wasn’t that sizeable and it cleared uncertainties, and that’s being welcomed by the market.”
The 22 companies that completed IPOs worth at least $100 million in Hong Kong this quarter have gained on average 8.8 percent from their offer prices after adjusting for deal size, data compiled by Bloomberg show. Fu Shou Yuan, which develops and operates graveyards in Chinese cities including Shanghai, raised $215 million.
Asian stocks advanced today after the Fed showed confidence in the U.S. labor market by tapering asset purchases while still promising to hold interest rates close to zero.
“We are seeking to expand our business to all the provincial capitals in China,” Fu Shou Yuan Chairman Bai Xiaojiang said in an interview in Hong Kong. “The reform and opening of the country with 1.4 billion people has helped create massive demand for our services.”
Kerry Logistics jumped as much as 11 percent from its IPO price while China Conch rallied as much as 30 percent. Both companies sold shares at the top end of marketed price ranges, raising about a combined $750 million. Consun Pharma gained as much as 16 percent.
BBMG Corp. (2009), a Chinese cement maker that went public in July 2009, was the last Hong Kong IPO of at least $100 million to gain more than 50 percent in its first day, data compiled by Bloomberg show.
Fu Shou Yuan sold 500 million shares at HK$3.33 each, the top end of a marketed range. The company has an overallotment option to sell another 75 million shares, according to its IPO prospectus. Citigroup Inc. was the sponsor of Fu Shou Yuan’s IPO.
The company, founded in 2003, runs graveyards and funeral services in eight Chinese cities, according to its website.
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