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NetEase Seeks Up to $2.8 Billion in Hong Kong Stock Offering

Crystal Tse and Julia Fioretti
·2-min read

(Bloomberg) -- NetEase Inc. has started taking investor orders for a listing in Hong Kong that could raise as much as $2.8 billion, which could be the world’s second-largest initial share sale this year.

The company plans to sell 171 million new shares in its second listing before exercising the over-allotment option, according to terms for the deal seen by Bloomberg. The offering by the Nasdaq-listed Chinese internet company is already oversubscribed, people familiar with the matter said. It has set the maximum offer price at HK$126 ($16.25) a share, meaning it could raise as much as $2.8 billion.

NetEase’s listing is set to overtake coffee giant JDE Peet’s BV’s $2.5 billion initial public offering in Europe as the second-largest initial share sale this year. Only Beijing-Shanghai High Speed Railway Co. has raised more with its $4.3 billion IPO in January, according to data compiled by Bloomberg.

The offering comes as tensions between the U.S. and China are intensifying. Late last month, the Senate passed a bipartisan bill that could force major Chinese companies to stop trading their shares on U.S. exchanges. On Friday, President Donald Trump announced measures including that American financial regulators would examine Chinese firms listed on U.S. stock markets with an eye toward limiting American investment in the companies.

NetEase follows Alibaba Group Holding Ltd., which raised $13 billion in a homecoming listing last year while Inc. won approval from Hong Kong Exchanges & Clearing Ltd. last week for a $2 billion offering, Bloomberg has reported.

NetEase’s Hong Kong share sale represents about 5% of its total shares outstanding after the completion of the deal. The company is taking orders from institutional investors from Monday through June 4 and retail ones from June 2 to June 5, terms for the deal show.

It aims to price the offering on June 5 before the U.S. market opens and to begin trading on June 11. NetEase plans to use the proceeds for global strategies and opportunities, to fund innovation and general corporate purposes.

China International Capital Corporation Ltd., Credit Suisse Group AG and JPMorgan Chase and Co. are joint sponsors.

A representative for NetEase declined to comment on the subscription of the offering.

(Updates first, second and third paragraphs with details of share offering.)

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