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Baozun Launches IPO in Hong Kong

By Eric Volkman – Updated Sep 17, 2020 at 3:14PM

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It's selling at least 4 million new shares in the enclave as part of a broader 40-million-share global issue.

Baozun (BZUN -3.54%) is sticking to its home region for its latest round of capital raising. The Shanghai-based e-commerce company announced Thursday that it has launched an initial public offering (IPO) in Hong Kong, after which it will be listed on the Main Board of the enclave's stock exchange. The IPO is part of a broader global issue of 40 million freshly minted shares of the company's Class A ordinary stock.

Four million of these shares are planned to be sold in the enclave, although the company said it could expand this number to 20 million, half of the global total. Baozun did not specify where the remaining shares will be marketed. The offer price of the shares in Hong Kong is to be a maximum of 103.90 Hong Kong dollars ($13.41) per share.

IPO spelled out in colorful blocks.

Image source: Getty Images.

The price, or prices, outside the enclave could be higher in certain markets, Baozun said. It will set these by Sept. 23; they will be based on investor demand and the price of the company's American depositary receipts (ADRs), which are listed on the Nasdaq. The new stock will be fully fungible with the ADRs, the company stressed.

At the maximum planned level, the Hong Kong IPO price would be significantly higher than the current level of the company's ADRs. Since each ADR, currently trading around $34.70 apiece, represents three Class A shares of the company, the per-share price in the U.S. would be only $11.57.

The company did not specify how it plans to use the proceeds of the IPO.

Baozun currently has just over 63 million ADRs outstanding, representing almost 190 million Class A shares.

Likely on fears of shareholder dilution, investors were trading those ADRs down significantly in late Thursday action. They had declined by 4.7% at the close.


Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baozun. The Motley Fool has a disclosure policy.

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