IPOS - Tuhu Car IPO Gets Off To Slow Start Despite Star Power | Benzinga
Key Takeaways:
- Tuhu has been backed by five established investors including Tencent, Leapmotor and Gotion High-Tech in its public offering starting last Friday
- The company posted an adjusted profit for the first time in its latest half-year earnings but its Hong Kong shares got a lukewarm response from the public
By A. Au
How much investor interest can a company bank on if it has lost 15.3 billion yuan ($2.1 billion) in four years?
The Chinese car servicing platform Tuhu Car Inc. (9690.HK) is finding out, as it motors ahead with its IPO on the Hong Kong Stock Exchange after finally passing its listing hearing last month at the third application attempt.
The online to offline auto maintenance business has accelerated its revenues in recent years but has been grinding its wheels in deep losses, after investing heavily to expand in a fiercely competitive market.
Determined to go public, the company persevered when its first filing faltered early last year and is now approaching the IPO finishing line. Tuhu will issue about 40.62 million new shares with a price range from HK$28 to HK$31 and will be listed on Sept. 26, with four prominent investment banks as sponsors: Goldman Sachs, CICC, BofA Securities and UBS.
Aside from that star lineup, Tuhu is backed by five more cornerstone investors with solid credentials. According to the prospectus, the big names are Tencent Holdings (0700.HK), which already held a 19.7% stake in Tuhu before the IPO, Zhejiang Leapmotor Technology (9863.HK), a new-energy vehicle maker that listed on the Hong Kong Stock Exchange in September last year, Shenzhen-listed Gotion High-Tech (002074. SZ) and Shanghai Zizhu Hi-Tech Zone and Castrol Holdings. These in total account for $100 million worth of shares, or about 62% of the offering.
The admission fee is only HK$3,131.3 ($401) per lot of 100 shares, a low threshold compared with recent IPOs, but the company’s offering has not set pulses racing.
Tuhu managed to attract HK$54.59 million in margin subscriptions on the first day of the public offering last Friday, only 43% of the HK$126 million it aimed to raise in that portion, reflecting limited investor interest amid the recent market downturn. Market sources noted that Tuhu decided on Wednesday to price its shares at ...