China's Baidu raises $3.1 billion from Hong Kong listing

By Scott Murdoch

HONG KONG (Reuters) - Baidu Inc has raised $3.1 billion in its Hong Kong secondary listing, according to a filing by the Chinese internet search giant.

New York-listed Baidu said it will sell 95 million shares at HK$252 ($32.45) apiece as part of the transaction.

The deal showed that the desire of Hong Kong's retail investors to buy into new stock market transactions shows no signs of slowing.

The retail tranche of the deal, which was worth 5% of the total share sale, was about 100 times oversubscribed, sources told Reuters, who added the institutional tranche was covered multiple times.

At that rate, 12% of the deal will be sold to those retail investors under Hong Kong's "clawback" rules. Hong Kong operates a "clawback" system where heavy oversubscription from small investors can result in them getting a greater share.

Demand for margin loans to buy into Baidu's deal also remains strong. Online broker Futu recorded 90,000 subscriptions from investors to borrow HK$14.7 billion in margin loans, according to a spokesman.

The price of HK$252.00 is a 2.7% discount to Baidu's closing price of $266.78 in New York on Tuesday, when its American Depository Shares (ADS) rose 0.47%.

The company's U.S.-listed shares fell 2.4% to $260.26 in early trading.

Baidu's shares are 23.37% higher so far this year and gained 4.6% while the Hong Kong bookbuild was underway.

One Baidu ADS is equivalent to eight of its Hong Kong shares, the company said. The shares will start trading on the Hong Kong market on March 23.

Baidu is the 15th Chinese company listed in the United States to carry out a so-called homecoming listing since Alibaba Group began the trend in November 2019.

($1 = 7.7659 Hong Kong dollars)

(Reporting by Scott Murdoch in Hong Kong, Additional reporting by Chavi Mehta in Bengaluru; Editing by Tom Hogue, Muralikumar Anantharaman, David Evans and Shounak Dasgupta)