ECM Weekly (13 October 2018) - Tencent Music Delays IPO

The market correction this week was quick to claim its first victim, Tencent Music Entertainment (TME US). It was reported that the company is delaying its IPO, probably to November, in hopes that the market will be more stable then. Nevertheless, Insight Providers on Smartkarma have already done plenty of work done on this mega IPO to help clients and readers to understand the business. Scroll down to the table of pre-IPO coverage below to get all the insights.

This week's debuts have not done well either. Aavas Financiers Ltd (AAVAS IN) , Midea Real Estate (3990 HK) , and Jiangxi Ganfeng Lithium (1772 HK) have all opened below their IPO price on their first day of trading and has failed to claw back any of its losses even as the market rebounded on Friday. We might see bookrunner support coming in next week for the Hong Kong IPOs. We think that liquidity will be thin going forward for Midea Real Estate because this is likely a friends-and-family type of IPO and, according to the latest HKEX filing, its top 10 placees hold 87% of the total IPO shares.

On the other hand, Aavas Financiers Ltd (AAVAS IN) had surprisingly shallow price correction despite India non-banking financial companies (NBFCs) and housing finance companies (HFCs) taking a big hit to their share price due to the IL&FS default. On average peers have corrected 27%, with the worst, Dewan, having corrected by 63% while Lic Housing Finance (LICHF IN) seems to have fared the best having corrected only 15%.

For upcoming IPO activities, next week Osotspa Co Ltd (OSP TB) will be listing on the 17th while the two US IPOs will be closing their books. Thailand Future Fund (TFFIF TB) has already opened its book this week and we have heard that Innovent Biologics Inc (1641475D HK) will open its books on Monday.

Ke Yan, CFA, FRM has already covered the IPO in detail through his two insights, Innovent Biologics (信达生物) IPO: A Major PD-1 MAb Competitor Might Have Just Emerged (Part 1) and Innovent Biologics (信达生物) IPO: Pricing the PD-1 and Biosimilars Competition (Part 2).