Technology & Ideas

Foxconn's China Listing Isn't for the Average Joe

Less than 5.7 percent of shares will be available to trade freely.

If you’re an average investor, good luck getting a piece of Foxconn’s China IPO.

Photographer: E+/Getty Images

By now, you’ve probably heard about the blockbuster IPO of Terry Gou’s Foxconn Industrial Internet Co.

Good luck getting your hands on the shares.

Gliding through regulatory red tape like a hot knife through butter, FII’s Shanghai listing has caught a lot of attention, and money.

The not-so-high-tech arm of Foxconn Technology Group is raising 27.1 billion yuan ($4.3 billion) by selling the bare minimum 10 percent of its stock for trade on the Shanghai Stock Exchange. That means 90 percent stays under the control of Taipei-listed Hon Hai Precision Industry Co. via 33 different affiliates – overkill, Terry, overkill – and can’t be traded for 36 months.

Of the 10 percent being sold, though, 3 percent was doled out to a who’s who of Beijing favorites with lockups of one to four years. A further 1.3 percent is restricted from trading for 12 months.

That leaves just 5.6759 percent of shares available to trade freely. 

Crumbs

Less than 5.7 percent of Foxconn Industrial Internet shares will be available to trade during the first year after listing

Source: FII

Only one other company on the Shanghai exchange has a smaller free float – Yantai Eddie Precision Machinery Co., which listed last year and has annual revenue of just $94 million, according to data compiled by Bloomberg. Even after 12 months, the FII float will rise to only 8.06 percent, less than all but three of the almost 1,500 stocks listed in Shanghai.

Locked Up

Only a fraction of FII's shares will be available for trading on the Shanghai Stock Exchange

Source: Bloomberg, FII

FII’s offering, the largest in China since 2015, has been labeled a marquee IPO and part of Beijing’s efforts to court an unrepresented sector. By keeping supply tight, Foxconn and the Chinese government get their listing while maximizing the chances that hot demand will drive up the price.

That’s a win-win situation, except for the average punter.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Tim Culpan at tculpan1@bloomberg.net

    To contact the editor responsible for this story:
    Matthew Brooker at mbrooker1@bloomberg.net

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