China’s SMIC to raise £5.25 billion via a secondary listing in Shanghai

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jul 5, 2020
  • China’s SMIC to raise £5.25 billion via a secondary listing in Shanghai.
  • The offer will mark the largest for tech companies on Shanghai's STAR market.
  • SMIC had initially planned on raising £2.27 billion via the share sale.

China-based chipmaker, Semiconductor Manufacturing International Corp (HKG: 0981) expressed plans of raising £5.25 billion on Sunday via a secondary listing in Shanghai. Following a recent surge in its stock listed in Hong Kong, the company now priced its offer to raise more than double the amount that it originally targeted. The listing will mark the largest for technology companies on Shanghai’s STAR market. Learn more about the basics of an initial public offering (IPO).

Hong Kong-listed shares of SMIC posted an intraday gain of over 5% on Friday. At £3.44 per share, it is currently about 160% up year to date in the stock market after recovering from a low of £1.18 per share in late March.

SMIC reveals a per-share price of £3.11 for its offering

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Initially, SMIC had planned on raising £2.27 billion via the share sale. As per its filing on Sunday to the Shanghai Stock Exchange, the company now revealed a per-share price of £3.11 that values SMIC at £22.23 billion, higher than £19.55 billion of its market capitalisation in Hong Kong.

SMIC’s move is attributed to the rising tech-related tensions between the United States and China that is fuelling a trend for Shanghai-based firms to seek listings closer to home. The raised funds, as per the Chinese chipmaker, will be directed at replenishing operating capital and funding future projects.

Founded in 2000, Semiconductor Manufacturing International Corp is the leading name in the league of Chinese chipmakers and rivals Taiwan Semiconductor Manufacturing Company. TSMC, however, boasts more advanced technology.  

SMIC names Haitong Securities as the lead underwriter

SMIC also named Haitong Securities as the lead underwriter that would have the authority to expand its IPO by another 15%. In such an event, the Chinese company will be able to raise as much as £6.03 billion. According to SMIC, the institutional portion of its offering was roughly 165 times subscribed.

Abu Dhabi Investment Authority and Singapore’s GIC Private Limited pledged £45.34 million and £340 million respectively to SMIC’s listing. Another £400 million investment will come from China’s National Integrated Circuit Industry Investment Fund (the big fund). An online subscription that is primarily targeted at inviting individual investors, SMIC said, will begin on Tuesday.

SMIC’s Hong Kong stock performed largely upbeat last year with an annual gain of almost 100%. At the time of writing, it has a price to earnings ratio of 87.09.  

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