ECM Weekly (18th July 2021) - Krafton, Kakao Bank, Bukalapak, Filinvest REIT, Zomato, China ADR IPO

ECM activity eased after China’s Cyber Security announcement last week.

It was reported that Bytedance has earlier halted its US IPO plans after warnings of data security from Chinese regulators. Adding to the list of halted China ADR IPO plans is Alibaba-and-Tencent-backed Xiaohongshu. Lalamove was also reported to be considering moving its US$1bn IPO to Hong Kong as well.

On top of that, China is planning on exempting Hong Kong IPOs from seeking the approval of cybersecurity regulators, showing that it was specifically targeting US listings. Following our coverage on the event, this week, we discussed the new draft Cyber Security Review measures and its likely impact on future listings.

• China ADRs - Kanzhun, Full Truck and Didi - Regulators Sending a Message

• China ADRs - Now the Message Is Loud and Getting Clearer

• China ADRs - Draft Cyber Security Review Measures - ADRs Listing Likely Shut, HK Might Face Delay

For live deals this week, in Korea, we initiated on Kakao Bank, South Korea’s largest digital bank. Its US$2.2bn bookbuild will close on Wednesday, pricing on Thursday and it is expected to debut on 4th August. Despite its short operating history, Kakao Bank has recorded a stupendous growth rate.

• Kakao Bank IPO - Riding on Parent’s Network but Boundaries with Kakao Pay Remain Unclear

• Kakao Bank IPO - Pricey as It Should Be

• Kakao Bank IPO - Lack of Lock-Up and MSCI, FTSE Index Implications

Continuing our coverage on Krafton, we shared our thoughts on valuation, index inclusion, and its tiered IPO lock-up agreements. Books were said to be multiple times covered. Bookbuild is expected to close on 27th July and debut on 10th August.

• Krafton IPO - Adapting and Transforming Well

• Krafton IPO - Assumptions and Valuation

• Krafton IPO - Lock-Up (Or Lack Thereof on Most Shares) + Index Inclusion

In Indonesia, we shared our thoughts on valuation of Bukalapak. Later in the week, it was reported that IPO bookbuild was upsized to US$1.5bn, up from an initial US$1.1bn deal. Books were multiple times covered, with interests coming from global long-only investors, sovereign wealth funds and domestic institutions, as per media reports. Bookbuild will close on Monday and shares will trade on 6th August.

• Bukalapak IPO - Structural Tailwinds with a Noble Cause

• Bukalapak IPO - Peers & Valuation - Betting on Its Potential

In the Philippines, Filinvest REIT launched its US$240m bookbuild. Despite an initial portfolio of 17 properties, we think that the REIT is like a single asset. The REIT has since guided pricing towards the lower end of the IPO price range. Books will close Monday and begin trading on 12th August.

• Filinvest REIT IPO - Almost like a Single Asset REIT, COVID Hasn’t Been Kind

• Filinvest REIT IPO - Hard to Get Excited, Despite the Yield

In India, Zomato closed its bookbuild, raising US$1.26bn and making it the largest listing in India from the technology sector. Books were oversubscribed by 38x with QIBs subscription at the highest 51.79x and HNI at 32.97x. Shares will debut on 27 July, and we covered the deal earlier:

• Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps

• Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x

• Zomato Pre-IPO - Peer Comparison - Listed and Domestic

• Zomato IPO - Strong 4Q21, Has a Very Long Runway

Yidu Tech IPO lock-up expired Thursday this week and about a total of about US$2bn worth of shares have been freed up. We discuss the profile of shareholders and their likelihood of selling in:

• Yidu Tech (医渡云) Lock-Up Expiry - About US$2bn Worth of Shares Unlocked

In Hong Kong, there were multiple biopharma debuts. Brii Biosciences debuted on Tuesday, traded slightly upwards on its first day before dipping, breaking deal price, and closing 6.5% below deal price on Friday.

• Brii Biosciences (腾盛博药) Pre-IPO: A hopeful tackle on HBV

• Brii Biosciences (腾盛博药) Pre-IPO: Thoughts on Valuation

• Brii Biosciences (腾盛博药) IPO: Not a Demanding Valuation for Its Differentiation

• Brii Biosciences (腾盛博药) IPO Trading: Note the Pre-IPO Investors Subscription

Medlive Technology priced its bookbuild at the top end and began trading on Thursday. Shares did well on its first day, closing 14% higher and ended the week 10.5% above IPO price.

• Medlive (医脉通) Pre-IPO: Internet hospital a different ball game

• Medlive (医脉通) IPO: Candidate for Multi-Bagger

• Medlive (医脉通) IPO Trading: Expect a Strong Debut

Kindstar Globalgene was priced at the top end and began trading on Friday. The IPO debuted poorly and closed 7.6% below IPO price on its first day.

• Kindstar (康圣环球) Pre-IPO: Issues with Scalability

• Kindstar Globalgene (康圣环球) pre-IPO: Is it worth the premium?

• Kindstar Globalgene (康圣环球) Pre-IPO: Financial and Valuation Update

• Kindstar Globalgene (康圣环球) IPO: Fairly Valued for a Questionable Moat

• Kindstar (康圣环球) IPO Trading: Pattern of Demand Divergence

New filings this week include digital payments providers One 97 Communications Limited (Paytm) and Mobikwik. They are looking to raise US$2.2bn and US$255m, respectively, from their India IPOs. The former is backed by Softbank, while the latter boasts pre-IPO investors that include American Express, Cisco, Sequoia etc.