Tech firm raises HK$53 billion in major milestone for city’s bourse

High-speed optical interconnect solutions provider Zhongji Innolight Co made its Hong Kong debut on Thursday, marking the city’s largest initial public offering in seven years.

Liu Sheng, chairman and CEO of Zhongji Innolight, said at the listing ceremony that the Hong Kong listing is a vital step toward the company’s future. He said that the company will continue to innovate and drive technological progress to deliver industry-leading optical interconnect solutions to global customers.

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Zhongji Innolight raised net proceeds of around HK$52.89 billion ($6.74 billion) from the listing. According to its prospectus, about 35 percent of the proceeds will be allocated over the next five years to continuous research and development of optical interconnect products.

Around 30 percent will be used to expand global production capacity, which is expected to add an annual capacity of about 50 million optical modules over the next three years. The remaining funds will be used to enhance the company’s supply chain resilience and commercialization capabilities.

Optical transceivers, Zhongji Innolight’s core products, enable high-speed data transmission via fiber-optic cables. These components are widely used in data centers, cloud computing networks, and artificial intelligence systems.

Its major clients include leading technology companies such as Nvidia and Alphabet. In the first quarter of the year, the company’s revenue nearly tripled to 19.5 billion yuan ($2.9 billion), with 61.7 percent of revenue generated from the United States.

The IPO attracted a strong lineup of cornerstone investors, including sovereign wealth funds such as Temasek Holdings and the Abu Dhabi Investment Authority, as well as prominent institutions and tech giants including BlackRock Inc, JPMorgan Asset Management, Alibaba Group, and Tencent Holdings.

READ MORE: Innolight seeks up to $7b in biggest Hong Kong listing in years

The amount raised was the highest since Alibaba Group Holding’s secondary listing, which brought in $12.9 billion in 2019.

Michael Wong Wai-lun, deputy financial secretary of the Hong Kong Special Administrative Region, said that Zhongji Innolight’s successful listing reflects the immense appeal of Hong Kong’s capital market to global investors.

He added that the listing will further enrich Hong Kong’s hard-tech industry landscape, and that the city will continue to leverage its strengths as an international financial center while bolstering finance, and innovation and technology, as two core growth drivers.

Following the listing, the company’s share price once trended downward, closing at HK$960 per share, down 2.04 percent.

“This (decline) primarily reflects the significant pullback in AI-related stocks in both Hong Kong and overseas markets since its bookbuilding started,” said Kenny Ng Lai-yin, a strategist at Everbright Securities International.

Ng said that AI concept stocks in markets including the US, South Korea, and Japan have recently experienced noticeable corrections. Following massive previous gains in these stocks, investors are showing a degree of anxiety. “Over the medium to long term, I believe the hyper-growth phase of AI is far from over,” he added.

The Hang Seng Index closed at 25,858.88 points on Thursday, up 0.2 percent, while the Hang Seng Tech Index — which tracks the 30 largest technology companies listed in Hong Kong — fell 1.25 percent to 4,803.77 points.

Reuters contributed to this story.

Contact the writer at akirawang@chinadailyhk.com