Laifu Harmonic seeks up to HKD1.15B in Hong Kong IPO debut

Key Takeaways:

Laifu Harmonic prices IPO at HKD77-HKD85.5 per share
Ten cornerstone investors commit nearly RMB375 million combined
Net proceeds of HKD1 billion to fund production and R&D expansion

Laifu Harmonic (03952.HK), a provider of robotic harmonic reducers, launched its Hong Kong initial public offering Monday, seeking to raise as much as HKD1.15 billion ($147 million) in a deal backed by 10 cornerstone investors.

"The IPO will accelerate our production capacity expansion and strengthen our position in the precision transmission components market," the company said in its listing document.

The company is offering 13.44 million H shares globally, with 5% reserved for Hong Kong retail investors and 95% for international institutions. The offer price ranges from HKD77 to HKD85.5 per share, with a board lot of 100 shares requiring an entry fee of about HKD8,636. The subscription period runs through Thursday, with trading expected to begin June 30 on the Main Board. CMBI acts as the sole sponsor.

The IPO has attracted 10 cornerstone investors — Oaktree, Mingshan Capital, Harvest International, CDH Global, E Fund, Eurus Holdings, Qingchi Capital, Dream'ee HK Fund, Factorial Master Fund and Oasis Fund — collectively subscribing for shares equivalent to nearly RMB375 million ($52 million). Based on the mid-point offer price of HKD81.25, net proceeds are estimated at about HKD1 billion.

The company plans to allocate 55% of proceeds to expanding production facilities, including equipment procurement and staff recruitment; 20% to research and development for product portfolio enrichment; 10% to strategic investments or acquisitions; 5% to overseas sales network expansion; and the remaining 10% to working capital and general corporate purposes.

The pricing gives Laifu Harmonic an enterprise value of roughly HKD5.4 billion at the mid-point, as the robotic components maker taps into growing demand for automation components in China's manufacturing sector. First-day trading on June 30 will test institutional appetite for the niche industrial technology sector in Hong Kong's recovering IPO market.

This article is for informational purposes only and does not constitute investment advice.