China’s Midea Group to launch at least $3 billion share offering in Hong Kong, sources say

By Scott Murdoch and Julie Zhu

SYDNEY/HONG KONG (Reuters) -Chinese home appliance maker Midea Group plans to launch a share offering in Hong Kong to raise at least $3 billion as early as Monday, said two sources, in the city’s largest deal in more than a year.

Midea is listed in Shenzhen and the discount offered to investors to buy its Hong Kong shares has not yet been finalised, according to the two sources with direct knowledge of the matter.

Hong Kong shares typically trade at a discount to mainland-listed stocks.

Midea Group did not immediately respond to a request for comment. The sources could not be identified as the information was confidential.

Midea’s listing would be the largest share offering in Hong Kong since Chinese lithium battery maker CALB raised almost $1.3 billion in October 2022.

The manufacturer’s Shenzhen-listed shares fell by nearly 3% to 63.6 yuan on Thursday, its largest fall in six weeks. The company has a market capitalisation of 444 billion yuan and the stock is up 23% this year.

Dealmakers hope a successful large deal by a well-known company like Midea could revive Hong Kong’s listing prospects.

There has been about $2.5 billion raised in Hong Kong initial public offerings (IPOs) so far in 2024, according to Dealogic data. That is far below the $22.1 billion year-to-date record set in 2021.

Midea was questioned by China’s securities regulators during the approval process on the impact that a large sized deal would have on its Shenzhen share price, Reuters reported in May.

The company applied for the Hong Kong listing in October and did not receive regulatory approval until July for the Hong Kong deal to proceed.

Bank of America and China International Capital Corp (CICC) are the sponsors of the listing.

In April, the China Securities Regulatory Commission (CSRC) strengthened supervision of onshore listings to protect small investors amid a stock market rout. It also toughened rules for firms seeking funds offshore through IPOs, second listings or primary placements.

Midea, based in Foshan city in Guangdong province, churns out a wide range of home appliances including air conditioners, refrigerators and laundry machines.

The company posted a record-breaking profit of 20.8 billion in the first half of this year, up 14.1%. Its revenue rose 10.3% to 217 billion yuan over the same period.