The red-hot Hong Kong IPO market witnessed an unusual case this year as Sichuan Biokin Pharmaceutical Co., Ltd. (688506.SH) (new listing code: 2615.HK), already listed on the A-share market, abruptly announced a delay in its H-share listing just before the close of its Hong Kong IPO subscription period.
The company stated that due to current market conditions and after consulting with its global coordinators, it decided to postpone the global offering and will not proceed as outlined in the prospectus. Consequently, the international underwriting agreement for the global offering will not be executed, and the Hong Kong underwriting agreement for the public offering will not become unconditional. The company emphasized that this decision does not affect its current operations and reaffirmed its commitment to business development and expansion. BIOKIN and its global coordinators are carefully evaluating an updated timeline for the offering. Subscription funds will be refunded by November 17 (next Monday).
BIOKIN’s H-share offering ran from November 7 to noon on November 12, with 8.634 million H-shares issued, 10% of which were allocated to Hong Kong’s public offering. The price range was set at HK$347.5 to HK$389 per share, aiming to raise up to HK$3.36 billion. Each lot consisted of 100 shares, with an entry cost of HK$39,292.3. Goldman Sachs, J.P. Morgan, and CITIC served as joint sponsors. Data from major Hong Kong subscription platforms indicated that BIOKIN’s margin financing reached approximately HK$6.33 billion, representing an oversubscription of about 17.8 times, suggesting the targeted HK$3 billion might have already been secured.
**Last-Minute Halt Raises Questions** Such a last-minute IPO suspension is rare in Hong Kong’s market history. Typically, delays or withdrawals occur before the subscription period begins.
Historical precedents include Shougang Langze, which postponed its July 2024 listing twice due to shareholder litigation alleging violations of the Company Law, eventually refunding subscriptions and shelving its IPO plans. A more prominent case was Ant Group’s 2020 suspension during its Hong Kong offering due to regulatory intervention, marking one of the most high-profile IPO withdrawals in Hong Kong’s history.
However, some companies successfully relisted after delays. For instance, Haixi New Medicine delayed its October listing by three days after regulators requested a review of potential duplicate applications and ineligible participants in its international placement. Similarly, Superstar Legend, initially slated for a June 2023 debut, paused due to weak demand in its international offering and underwriter commitments falling short of expectations. It later relisted in July after extending lock-up periods and adjusting its offer price.
Market observers questioned whether BIOKIN’s cited "current market conditions" were sufficient justification. Industry experts suggested deeper factors—such as earnings outlooks, sponsor coordination, or market positioning—might be at play.
**High Entry Barrier Defies Market Norms** Investment manager Li Mingde of Dasheng Asset Management noted that BIOKIN’s high entry barrier—nearly HK$40,000 per lot—deviated from Hong Kong’s recent IPO norms, where entry costs typically ranged between a few thousand to HK$20,000. "This high threshold likely limited retail participation, dampening subscription momentum in the current sentiment," Li remarked, adding that poor market feedback could have prompted the delay.
**Limited A-Share Discount Weakens Appeal** Unlike most dual-listed firms offering 20%-40% discounts for Hong Kong shares, BIOKIN’s H-share pricing represented only a 1.8%-12.2% discount to its A-share price. For comparison, Hengrui Pharmaceuticals’ 2024 Hong Kong IPO priced at a 25% discount to its A-shares, successfully attracting international capital while balancing mainland investor interests. BIOKIN’s narrow discount eroded its valuation appeal.
**Unclear Market Positioning Lacks Selling Points** As a profitable A-share-listed pharmaceutical firm, BIOKIN neither fits the high-growth biotech mold nor boasts unique overseas expansion narratives—key draws for Hong Kong investors. Analysts pointed out that its R&D pipeline lacks differentiation, and its A-share pricing already reflects fair value, leaving little room for H-share upside. Some speculated the delay might allow BIOKIN to await stronger earnings for a higher valuation.
**Sponsor Coordination Issues?** BIOKIN’s IPO sponsors—Goldman Sachs, J.P. Morgan, and CITIC—reportedly disagreed on pricing and allocation strategies, potentially disrupting the process. Similar cases include KK Group’s 2023 IPO setback after Credit Suisse withdrew as sponsor, and New Higher Education’s near-collapse due to valuation disputes with underwriters. Li Mingde noted that multi-sponsor deals without clear leadership often suffer inefficiencies and negotiation gridlock.
**HKEX Rules Permit Voluntary Withdrawals** Under Hong Kong Exchange rules, companies may voluntarily withdraw listings pre-debut for commercial reasons, provided they refund investors and disclose adequately. Recent years saw 2-3 annual withdrawals, such as Better Group’s 2021 refund over fee disclosure delays and Superstar Legend’s 2023 pause—none violating HKEX regulations. Investors in BIOKIN’s case will receive full refunds, including fees, within the stipulated period.
**When Will BIOKIN Relaunch?** Li Mingde called the delay a result of inadequate preparation and misaligned positioning. Successful Hong Kong listings require clear investor appeal, balanced pricing, and streamlined sponsor coordination. While some firms rebound post-withdrawal, others face prolonged delays. Market watchers expect BIOKIN to address valuation and sponsor alignment before relaunching.
This rare mid-subscription withdrawal serves as a cautionary tale for Hong Kong’s IPO market. Amid tightening scrutiny and liquidity fluctuations, issuers must meticulously prepare—not just on compliance but also in gauging market sentiment and stakeholder coordination—to avoid derailment.
Comments