Just when you thought Hong Kong’s IPO market couldn’t get any frothier, a bubble tea maker just surged 298 percent in its debut.
Shares of B & S International Holdings Ltd., known for a famous franchise called TenRen, staged the strongest mainboard debut in two years, closing at HK$3.98, after selling initial shares at HK$1. With orders for 2,601 times the shares for retail investors, the IPO was the most oversubscribed among 51 Hong Kong IPOs this year, and the second most ever. Trading volume is about 3.7 times the 100 million shares sold in the offering.
Hong Kong IPOs are sizzling in 2018. The initial retail portion of an average offering has been 225 times subscribed this year, more than double the level in 2017, data compiled by Bloomberg show.
Hong Kong’s Strongest 2018 Debuts
Franchised under brands including Taiwan’s TenRen, B & S operates 42 retail outlets in Hong Kong, according to its share sale prospectus. The company generated about 43 percent of its revenue from the retail business for the five months ended Aug. 31, the document shows.
Whether the first-day pop lasts remains to be seen. Ulferts International Ltd., an operator of furniture stores, soared 186 percent on its Jan. 29 trading debut, but the gain has narrowed to 45 percent above its offer price.
“This is an irrational rally driven by speculators chasing a relatively small stock,” said Ronald Wan, chief executive of Partners Capital International in Hong Kong, “It’s just a franchise chain and we have numerous Taiwanese bubble tea companies in Hong Kong.”