Listed under the stock code 2228, QuantumPharm’s shares ended their first trading day at HK$5.80, a 10-per cent premium to the initial public offer (IPO) price of HK$5.28, after briefly soaring by as much as 24.6 per cent. The Shenzhen-based company priced its stock at the lower end of a price range this week.
“The atmosphere among retail investors has improved significantly, so the current market condition [is conducive to] raising a larger amount,” said KGI Asia’s head of investment strategy Kenny Wen. “If another two or three companies worth HK$20 billion to HK$30 billion succeed in their IPOs and their stocks perform well, that will definitely help the overall market.”
QuantumPharm will use most of its IPO proceeds to enhance research and development capabilities and provide solutions.
QuantumPharm remains unprofitable, as its 2023 loss widened 19 per cent to 522 million yuan (US$72 million), from 437 million yuan a year earlier. Still the company’s successful fundraising values it at HK$19.8 billion.
QuantumPharm is the first company to list in Hong Kong under Chapter 18C, a new regime introduced more than a year ago for pre-revenue specialist technology firms. Chapter 18C allows companies worth at least HK$10 billion to sell shares even before they have made any revenue.
Normal listing candidates have to make at least a combined HK$80 million profit in the three years leading to their IPO.
“It is a significant moment, because China is becoming a world innovation powerhouse, and Hong Kong provides the world with unique access to the companies driving that trend,” said the stock exchange’s chief executive Bonnie Chan Yi-ting, who wrote the 18C rules while she was the chief operating officer of the exchange.
Another Chapter 18C candidate, Black Sesame International Holding, which makes chips for autonomous driving, passed its listing hearing on Hong Kong stock exchange on Wednesday. International Financing Review reported that it is seeking an IPO of about US$200 million.
The successful fundraising is a sign of a nascent recovery of Hong Kong’s IPO market. QuantumPharm’s IPO would take the overall fundraising in Hong Kong this year to US$1.41 billion, a third lower compared with a year ago. New listings raised US$24.49 billion in the same period in 2021.
Tencent owns 12.91 per cent of QuantumPharm after the IPO. The pharmaceutical’s list of shareholders include HongShan, Google and SoftBank Group.