Logo of Netease seen at its headquarter in Hangzhou, east China, April 15, 2020. /VCG
The Nasdaq-listed Chinese tech group Netease Inc aims to raise between two and three billion U.S. dollars in one of the largest equity deals so far this year when it launches a secondary listing in Hong Kong on Monday, Reuters reported quoting three people familiar with the transaction.
The offering from the Chinese technology company is expected to be one of several large secondary listings in the city this year as rising tensions between the United States and China have led Washington to question whether Chinese companies should be able to list in New York.
Netease will start the institutional book build on Monday and the retail offering will run until the end of the week, sources told Reuters. They asked not to be named as the information has not been made public.
Netease declined to comment on the listing process.
In its filings to the Hong Kong Stock Exchange, Netease said one potential risk for investors was proposed U.S. legislation that could force some Chinese companies to delist if their auditor had failed to comply with U.S. audit oversight for three years.
"We are also preparing our secondary listing on the Stock Exchange of Hong Kong, bringing our established brand back to China," the CEO of NetEase Ding Lei said in a letter to shareholders on May 26.
Netease is only the second company to launch a secondary listing in Hong Kong, following Alibaba in 2019, under a rule change in the city that finally allowed U.S.-listed Chinese groups to seek a secondary listing.
JD.com is expected to follow Netease, with plans to list on June 18 which could raise up to three billion U.S. dollars by selling down five percent of its shares, Reuters has reported.
Netease's deal will be Hong Kong's largest listing so far in 2020, according to Refinitiv data, and one of the largest in the world, depending on the final size.
Earlier this year, Asia hosted the largest deals, with Beijing-Shanghai High Speed Railway raising 4.4 billion U.S. dollars in China early in January and Thailand's Central Retail taking 2.52 billion U.S. dollars in February in Bangkok.
Companies have raised 36.9 billion U.S. dollars in IPOs so far this year, down 32.1 percent from the same period last year, Refinitiv data showed.
(With input from Reuters)