ECM Weekly (8th August 2021) - Li Auto, Cloud Village, CarTrade, Kakao Bank, Bukalapak, Huitongda

India ECM activity has been busy with multiple IPO bookbuild launches this week. In Hong Kong, IPO activity remains tepid but could turnaround with the Li Auto dual primary listing this week and the likely launch of Cloud Village IPO next week.

For our ongoing coverage, in Hong Kong, Li Auto priced its dual primary listing at HKD$118 per share, which is a 3.2% discount to Thursday’s close. Books closed a day earlier and shares will trade next Thursday.

• Li Auto HK Listing - Needs to Be Done at Discount Given XPeng’s Poor Debut

• Li Auto HK Listing Quick Take - Rebounded Higher After Approval; Discount Still Needed

Cloud Village braved the market and pre-marketed its US$1bn Hong Kong IPO despite recent regulatory crackdowns. We heard that the company will open its IPO for bookbuilding next week. We discussed its PHIP updates and updated our estimates.

• Cloud Village (NetEase Music) Pre-IPO - Was in the slow stream, playing catch-up

• Cloud Village (NetEase Music) Pre-IPO - Tencent Music Peer Comp, Regulatory Impact

• Cloud Village (NetEase Music) Pre-IPO - Initial Thoughts on Valuation.

• Cloud Village (NetEase Music) Pre-IPO - Mixed PHIP Update, Updated Thoughts on Valuation

We revisited Bytedance this week after the company briefly disclosed its financial performance for 2020. The company is currently working with data security compliance before its listing in Hong Kong. Recent private transactions in May 2020 valued the firm at US$100bn whereas some media reports suggested a possible valuation of US$425bn.

• ByteDance Pre-IPO: How Does It Fare Against Kuaishou as It Gets Closer to a Listing

We also initiated on Huitongda Network, a Chinese commerce and service platform serving rural areas, and its US$1bn IPO. In our note, we gave an overview of its performance and discussed its business model.

• Huitongda (汇通达) Pre-IPO - A Digitalization Story

In India, multiple IPO launches hit the markets this week. Devyani International, Yum’s Brands largest franchisor in India, closed its bookbuild on Friday. Books were open from Wednesday to Friday with anchor books results announced on Tuesday.

• Devyani Pre-IPO - Might not do another Burger King India but should be good

• Devyani Pre-IPO - Peer Comparison - Slots in Neatly

• Devyani Pre-IPO - Thoughts on Valuation

• Devyani IPO - Still Some Upside on Un-Adjusted EBITDA Basis

CarTrade Tech, an online portal for the sale of cars and two-wheelers in India, opened its US$404m bookbuild. The firm is backed by Warburg Pincus and Temasek. Anchor books closed on Friday. We discussed the firm’s growth and its pricing range:

• CarTrade Tech Pre-IPO - Acquisition Adjusted Growth Remains Low

• Cartrade Tech IPO - Too Expensive for Our Taste

Indian cement manufacturer, Nuvoco Vistas, and housing financial company, Aptus Value Housing Finance, were looking to raise US$673m and US$375m, respectively, in their IPOs. Nuvoco Vistas’ anchor books closed on Friday and shares are expected to debut on 23 August.

• Nuvoco Vistas IPO - Don’t See Any Strong Reason to Buy

For other upcoming IPOs in India, Fincare Small Finance Bank and Aditya Birla Sun Life Asset Management had secured SEBI’s approval for their US$180m and US$400m IPOs, respectively.

In Korea, Lotte Rental priced its bookbuild at the top end, raising US$742m. Books were well covered with the majority of orders at the top end of the pricing range. Shares are expected to debut on 19th August.

• Lotte Rental IPO - Not Growing Its Fleet as Fast but Utilizing Them Better

• Lotte Rental IPO - Peers and Valuation

Kakao Bank, South Korea’s largest digital bank, debuted on Friday and closed 79% above its IPO price, likely owing to the strong demand as evidenced from its institutional tranche being 1,733x covered.

However, by our estimate, even after the big debut pop, Kakao Bank could have potentially missed fast-entry by just 0.845%. That said, it was announced on 6th August that the company will be added into MSCI Global Standard Indexes from 23rd August onwards.

• Kakao Bank - MSCI Done, Missed FTSE by a Whisker.

• Kakao Bank IPO - Riding on parents network but boundaries with Kakao Pay remain unclear

• Kakao Bank IPO - Pricey as It Should Be

• Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications.

• Kakao Bank IPO Trading - One for Instis, Closer Look at FTSE and MSCI Inclusion. Remain Buyers

In Indonesia, e-commerce company Bukalapak raised US$1.5bn from its bookbuild and debuted on Friday. Shares traded limit up, closing 24.7% above its IPO price.

• Bukalapak IPO - Structural Tailwinds with a Noble Cause

• Bukalapak IPO - Peers & Valuation - Betting on Its Potential

• Bukalapak IPO Trading - Largest Indo IPO, Big Pop Could Get It into FTSE

In the Philippines, Robinsons Land Commercial REIT and Megaworld REIT began pre-marketing their respective, US$491m and US$477m IPOs. This comes after Filinvest REIT’s bookbuild where its shares are to debut on Thursday.

During the week, Del Monte Philippines delayed its US$770m IPO for the 2nd time (the previous was back in 2018). The company cited the resurgence of COVID-19 cases as reasons for this time’s deferment.

For new filings, in Hong Kong, Medbanks and JL Mag Rare-Earth, which is ChiNext-listed, filed for their respective US$1bn and US$200m IPOs in Hong Kong. The former is a big data, one-stop medical and healthcare services provider while the latter is a producer of rare earth permanent magnets.

In India, PB Fintech, an online financial provider, filed for its US$809m IPO. The company owns the online insurance aggregator, Policybazaar.com, and financial products aggregator, Paisabazaar.com. Other filings include FMCG food company Adani Wilmar, a 50-50 joint venture between Adani Enterprises and Wilmar Group, which has filed for its U$605m IPO.

Nykaa, officially known as FSN E-Commerce Ventures, has also filed for its US$538m IPO. It is an e-commerce company that focuses on beauty, wellness and fashion products. Personal indian banking services platform, Fino Payments Bank had also filed for its US$202m IPO earlier this week.

For placements this week, Aeon REIT investment is currently in the midst of bookbuilding for its US$230m follow-on offering. Bookbuild will end on Tuesday and pricing will be announced on Wednesday.

• Aeon REIT Placement - Back in the Market After Two Years

We also covered Money Forward’s US$300m global follow-on offering which has traded well, closing 12% above deal price on Friday. Books were reported to be about 10x covered.

• Money Forward Placement - Onward with More Cash

In Hong Kong, Xinte Energy raised US$133m from a primary placement. The deal traded well and closed 27.2% above deal price on Friday.

• Xinte Energy Placement - Well-Flagged Deal