Poly Culture Group Corp., which runs China’s largest auction house, surged 29 percent from its initial public offering price in its trading debut in Hong Kong.
The shares jumped as high as HK$44.60, from its offer price of HK$33, and closed at HK$42.60. The arts and entertainment arm of China Poly Group Corp., a state-owned conglomerate started by the military 22 years ago, and existing investors raised $331 million after pricing the IPO at the top end of a marketed range.
The company, which also manages 31 theaters, is seeking to compete with Sotheby’s and Christie’s International Plc, which have moved into Poly Culture’s home market. China eclipsed the U.S. to become the world’s largest art market in 2011, according to a report by the European Art Fair, only to lose its position back to the U.S. the following year as auction houses grappled with non-payment by clients, art forgeries and money laundering.
“We hope to expand our art management and brokerage business in the next five years and make them a revenue contributor equal to our auctioning business,” Chief Executive Officer Jiang Yingchun said today in Hong Kong. The company is also expanding its theater and performance business, as urbanization drives demand for entertainment in the country’s second-tier and third-tier cities, Jiang said.
CLSA Ltd. and Citic Securities Co. managed the IPO. Individual investors placed orders for more than 600 times the amount of stock available to them, a person with knowledge of the IPO said Feb. 28.
Ronald Wan, chief China adviser at Asian Capital Holdings Ltd., attributed the stock’s surge to demand from retail investors on the strength of parent company China Poly Group’s reputation.
“Poly Group is well known in China, though not for auctions,” he said. “This is more related to the brand name of the company and speculative elements.”