Innogen saw strong booking rate, ranking second on stock market
Chinese mainland drugmaker Guangzhou Innogen Pharmaceutical Group Co Ltd saw its initial public offering in Hong Kong oversubscribed by 5,342 times as of Thursday evening, making it the second-most sought-after new share this year on the Hong Kong Exchanges and Clearing (HKEX).
This IPO also marked the first since HKEX overhauled its IPO pricing and public market rules with effect from Aug 4.
Analysts expected these changes to bolster market competitiveness and help stabilize share price movements over the longer term, though they also warned that increased oversubscription could limit retail investors’ access to allotted shares.
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HKEX’s allocation and clawback mechanism allows issuers to reallocate shares from the placing tranche — which includes institutional and professional investors — to the public tranche if demand from retail investors is strong. Previously, the public tranche was capped at 50 percent.
Under the new rules, listing applicants can select between two share allocation mechanisms. The first features prescribed allocations, starting with 5 percent for public subscription, and rising to as much as 35 percent if demand is strong. The second allows issuers to set the public tranche upfront at any proportion between 10 and 60 percent, with no clawback, while retaining flexibility for issuers to adjust the allocations as needed.
Guangdong-based Innogen, a biopharmaceutical firm specializing in obesity and diabetes treatments, issued 36.56 million shares at HK$18.68 ($2.38) each to raise HK$683 million in total.
Set to debut on Friday, the IPO adopted the second mechanism, allocating 10 percent of the shares to the public market, with 3.65 million shares valued at HK$68.29 million.
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The IPO attracted 256,072 public offering applications, while only 18,279 successfully secured the allocation.
Kenny Ng Lai-yin, a strategist at Everbright Securities International, said Innogen’s strong booking rate was largely buoyed by the optimistic market outlook following the recent rally in pharmaceutical stocks.
He added that the reduced public tranche under HKEX’s new rules has intensified oversubscription, which he predicts could become the “new normal”. In the longer term, Ng said he believes the reform will benefit the Hong Kong stock market’s development and help stabilize the prices for new listings. The rules, he explained, allow institutional investors to secure a larger allocation and price the deals more accurately.
“Retail investors generally tend to trade more actively after the listing, which can increase price volatility,” Ng said. “By enabling institutional investors to hold more shares early on, the new rules in fact can help maintain stability in share prices during the initial stages.”
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HKEX said new listings in Hong Kong have grown substantially both in deal sizes and in the breadth and international composition of investors. “It is therefore crucial that we continue to evolve our listing framework so that it remains globally competitive and fit for purpose, ensuring that we benchmark ourselves favorably against international standards to appeal to the world’s next generation of leading companies,” Katherine Ng Kit-shuen, HKEX’s head of listing, said earlier this month.
Hong Kong’s IPO market showed a strong rebound in the first six months of this year, raising HK$107.1 billion from 42 listings — its best first-half performance since 2021. KPMG expects the city to maintain this IPO momentum well into the second half of 2025, supported by a record-high pipeline of applicants. As of July 31, HKEX data showed nine approved Main Board listings awaiting debut, with another 207 under processing.
Contact the writer at gabylin@chinadailyhk.com
