The optical-module maker plans to buy back shares denominated in yuan to anchor pricing before its initial public offering in the city
offshore listing in Hong Kongmay give global investors an anchor for pricing, as the Chinese supplier of US hyperscalers seeks to pre-empt a shaky start to trading in the city.
optical transceivers used in artificial intelligence(AI) data centres said it would repurchase its Shenzhen-listed shares for between 4 billion and 8 billion yuan, through its own or borrowed funds, it said in an exchange statement on Tuesday night, just two days before Zhongji’s high-profile Hong Kong debut on Thursday.
The buy-back came on the heels of a sell-off in Zhongji’s yuan-denominated stock, which was closing in on the offer price of HK$980 for the Hong Kong initial public offering (IPO). A further decline in the onshore stock increases the risk that its Hong Kong-listed shares may dip below the IPO price on the first day of trading, a setback for the company that is banking on an offshore listing to expand its overseas business and build up a corporate image among global investors.
“Zhongji’s buy-back plan comes at a sensitive time, namely just ahead of its Hong Kong listing,” said Dai Ming, a fund manager at Huichen Asset Management.
“The most plausible reason for doing this is to bolster sentiment before the Hong Kong debut,” he added.
“Falling stock prices on the home mainland market would for sure add downside pressure on Hong Kong-listed shares, as overseas investors use yuan-traded stock prices as a reference to price the H shares. By doing so, it may prevent a possible breach of the offer price.”