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Innovent Biologics loses US$492 million of market value in Hong Kong as stock placement plan roils investors
- Firm hired Morgan Stanley to help sell 68 million new shares at an 8.8 per cent discount to market price
- Similar fate greeted previous stock placements by China Vanke, Anta Sports and Country Garden in a market struggling with confidence
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Chinese biotech company Innovent Biologics is seeking to raise HK$2.4 billion (US$306 million) from a stock placement at a discount to fund research and grow its drug discovery business. The stock slumped by the most in a month.
The company plans to issue 68 million new shares at HK$34.92 each, or 8.8 per cent below its last-traded price on Monday, according to a stock exchange filing on Tuesday. It hired Morgan Stanley, one of its IPO sponsors and arrangers in October 2018, to help find buyers for the shares.
The new shares represent about 4.2 per cent of its enlarged capital, and the net proceeds will be mostly allocated to fund its global clinical programmes, marketing, commercialisation and general corporate use, the company said.
The stock fell as much as 12 per cent to HK$33.80, before recovering to HK$35.80 at the closing of Tuesday trading. Tuesday’s slump erased HK$3.9 billion of its market value. The stock has risen 6.9 per cent this year, while the Hang Seng Index declined 8.9 per cent.
Investors generally frown on stock placements to outside investors at a deep discount, more so in a market that struggles with confidence. Recent placements by property developers Country Garden and China Vanke and sportswear brand Anta Sports Products have met with sell-offs that erased billions from their market value.
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