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China's Yixin posts strong Hong Kong debut amid tech IPO boom

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11/16/2017 | 11:31am CET

Yixin Group, China's top online car retailer, ended 6 percent higher in its trading debut after an intra-day surge of nearly a third, adding to a string of successful tech floats in Hong Kong that is boosting the city's reputation for new listings.

Backed by Chinese internet giants Tencent Holdings and JD.com, Yixin raised HK$6.77 billion (£657.7 million) after pricing its initial public offering at the top of an indicative range of HK$6.60–HK$7.70.

While Hong Kong has been the world's largest listings venue for the past two years, a stream of poorly performing deals had dented its reputation among international investors compared to other fundraising centres such as New York.

In the past six years, half of large Hong Kong IPOs - defined as those worth at least $500 million (£379.2 million) - have ended their debut trading session either flat or lower, according to Thomson Reuters data. In New York, 80 per cent of IPOs over that period enjoyed a first-day pop.

Including Yixin, the last seven large floats in Hong Kong have all gained on their debut - a run of success not seen at any point in at least six years.

Yixin's shares opened on Thursday at around HK$10 and extended gains to HK$10.18 in early trade. They closed at HK$8.15 as the initial excitement abated somewhat amid a weak day for many Hong Kong blue-chips.

“We are a Tencent-backed company...In Hong Kong, we can attract both international investors as well as Chinese ones who are more familiar with our business back in mainland China,” said CEO Zhang Xuan, speaking to reporters after the opening bell ceremony.

The gains gave the company a market value of HK$51.1 billion.

Spun off from New York-listed online automobile marketplace Bitauto Holdings in 2014, Yixin has gradually grown into a large online firm for trading new and second-hand cars, as well as providing auto-related financing services.

It posted a loss of 6.11 billion yuan in the first half of 2017, compared to a loss of 647,000 yuan a year earlier. Its revenue more than tripled to 1.55 billion yuan over the same period.

Tencent owns 24.3 percent of Yixin, while JD Financial Investment, a unit of JD.com, controls 12.7 percent and Chinese search engine Baidu holds 3.5 percent of the company.

On Monday, shares in gaming firm Razer Inc, backed by Intel Corp and Hong Kong billionaire Li Ka-shing, surged 18 percent in its Hong Kong stock market debut, after raising about $500 million in an IPO.

That came a week after China Literature Ltd, the e-book unit of Tencent, saw its shares surge more than 80 percent in their debut, marking the biggest first-day gain for a large IPO globally this year.

(Reporting by Julie Zhu; Additional reporting by Donny Kwok; Writing by Sumeet Chatterjee and Jennifer Hughes; Editing by Joseph Radford and Muralikumar Anantharaman)

By Julie Zhu

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