Analogue Holdings, Hong Kong’s largest electrical and mechanical engineering company controlled by the husband of the city’s justice minister, raised HK$336 million (US$43 million) in net proceeds in an initial public offering on Friday.
Shares of the company dipped 4 per cent to HK$1.15 apiece in the market open from an offering price of HK$1.2, before rising to an intraday high of HK$1.47. They were trading at HK$1.32 as of 9.52am. The company offered 350 million shares in total.
Analogue said because the retail tranche was oversubscribed 6.6 times, it decided to double the public portion to 20 per cent of the overall shares, in a stock exchange filing on Thursday.
The IPO comes as the interbank lending rate spiked to its highest level since October 2008. The increased borrowing costs, which stood at 2.99 per cent last Thursday, also affected the response to Budweiser Brewing Company APAC’s IPO, analysts said. The Hibor has since eased, to 2.38 per cent as of Thursday.
Otto Poon Lok-to, 78, a senior engineer and husband of Hong Kong’s Secretary for Justice, Teresa Cheng Yeuk-wah, founded Analogue in 1977. The company is the city’s top provider of services ranging from air-conditioning system design to lift installations, occupying a 9 per cent market share, according to a stock exchange filing.
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“I’d say the market reaction is quite cautious, because construction [related] stocks tend to have lower growth,” said Kenny Tang Sing-hing, chief executive at Royston Securities.
Last year Poon and Cheng were embroiled in a controversy involving illegal structures at their luxury houses in Tuen Mun in the New Territories.
Poon was later convicted and fined HK$20,000 in April for building an unauthorised pool in his garden.
Poon, the chairman and executive director of Analogue, owns a 63.5 per cent stake in the company through a family trust.
Two cornerstone investors agreed to subscribe HK$50 million worth of shares, representing 12 per cent of the overall offering. The investors are Hong Kong businessman Lawrence Yu Kam-kee, who is the former chairman of local travel agency Wing On Travel Holdings, and Dato Wong Sin-just, a businessman.
The highly concentrated shareholding could result in volatile share price movement following its debut, Tang said.
This is the third time Analogue had applied for a listing, after the first two applications submitted in May and October 2018 expired without a clear reason.
Analogue recorded a net profit of HK$315 million last year, down 27 per cent from a year earlier. Revenue stood at HK$6 billion, rising 20 per cent from 2017.
The 55-kilometre Hong Kong-Zhuhai-Macau Bridge, the world’s longest sea crossing that cost HK$120 billion, was one of Analogue’s most prominent projects.
Bocom International is the sponsor of the listing.
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