China's WuXi XDC jumps 40% in Hong Kong trading debut (updated)

WuXi XDC Cayman

17/11/2023 01:46

(Adds analyst quote in 7th and 8th paras)
    By Scott Murdoch and Donny Kwok
       SYDNEY, Nov 17 (Reuters) - Chinese medical research
group WuXi XDC's shares have risen nearly 40% as the stock
started trading on the Hong Kong Stock Exchange (HKEX) on
Friday.
    The firm raised $470 million in its initial public offering,
the third-largest new share sale in the city in 2023.
    The stock opened at HK$26.95 per share, compared with the
IPO price of HK$20.60.
    WuXi XDC sold 178.4 million shares in the IPO, which was
priced at the top of the range flagged to investors when the
deal launched last week.
    Demand for the IPO was among the strongest this year for a
larger-sized deal in Hong Kong, where investor appetite for new
share sales has been weak.
    The retail tranche of WuXi XDC's IPO was 49.96 times
covered, while the institutional portion was 19.6 times covered,
according to its HKEX filings.
        "During the IPO period, bio-pharmaceutical stocks listed
in Hong Kong generally experienced noticeable increases in their
share prices," Kenny Ng, analyst at Everbright Securities
International. "The performance of WuXi XDC is catching up with
the industry's overall upward trend over the past period."
  
        WuXi XDC is a joint venture between WuXi Biologics and
WuXi STA that provides end-to-end contract research services
covering antibodies and other biologics intermediates.
    Investors were drawn to the IPO because of WuXi XDC's ties
to WuXi Biologics which is a well-known brand in China's biotech
sector, according to one banker who worked on the deal.
    The IPO also attracted a Middle Eastern investor, the Qatar
Investment Authority, which subscribed for $45 million worth of
stock in the IPO, the prospectus showed.
    Hong Kong and China authorities have moved to strengthen
business ties with the Middle East to help drive investment into
the region.
    Despite the strong demand for WuXi XDC bankers are uncertain
there will be a major pick up in IPOs in Hong Kong in 2024 as
geopolitical risks persist and interest rates stay high.
    New share sales in Hong Kong fell 32.5% in the first nine
months of 2023 compared with the same time last year, according
to LSEG data.
    

 (Reporting by Scott Murdoch in Sydney and Donny Kwok in Hong
Kong; Editing by Christopher Cushing and Gerry Doyle)
 ((Scott.Murdoch@thomsonreuters.com;))