China Fintech Firm Falls 16% in Worst Hong Kong Debut Since 2018

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China Fintech Firm Falls 16% in Worst Hong Kong Debut Since 2018

Jeanny Yu
·2 min read

(Bloomberg) -- Chinese fintech firm Bairong Inc. slumped on its debut in Hong Kong, the second listing in the financial hub this week to disappoint following a global selloff in China’s technology sector.

Shares of the artificial intelligence-powered technology platform closed 16% lower on Wednesday, making it the worst debut among IPOs exceeding $500 million in Hong Kong in three years. The company had priced its shares at HK$31.80 each in the IPO offering, the high end of its indicated range.

The fall comes after video streaming service Bilibili Inc. slipped on its debut on Monday while Baidu Inc. - which debuted just last week - is trading around 15% below its listing price.

Bairong’s $507 million listing comes as investor enthusiasm for tech shares is waning globally, sapped by concerns about their remarkable run-up during the pandemic and the sustainability of Covid-era surges in online activity and gadget demand. The Archegos selloff exacerbated losses in recent days.

“The sentiment for IPOs has cooled down a lot after the recent correction,” said Kenny Wen, a strategist at Everbright Sun Hung Kai Co. “Although Bairong is doing cloud-related business, lots of its revenue comes from peer-to-peer, a gray area that’s likely to face more government crackdown. Investors no doubt will be very cautious.”

Chinese fintech companies are going through a particularly hard year after Beijing torpedoed Ant Group Co.’s initial public offering, signaling wider crackdowns for the sector. Regulators are inspecting businesses spanning from online lending to payments and insurance tech. That’s made investors more worried when it comes to backing companies in the industry.

Linklogis Inc., another fintech company, is scheduled to list on April 9.

Bairong’s cornerstone investors include Cederberg Capital Ltd., China Structural Reform Fund Corp. and Franchise Fund LP, which together bought about 64 million shares in the company, accounting for over 40% of this offering, according to its prospectus. The company’s revenue jumped 47% on year in 2019, but is down during the first nine months of 2020 relative to the same period.

(Updates with closing prices, tweaks paragraph 2 with size and scope)

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