Home appliance retailer China Paradise Electronics Retail has priced its shares at $2.25 each, allowing it to raise $1.02 billion ahead of Friday's trading debut, according to market sources. The decision to fix the price at the high end of the $1.90 to $2.30 range came after institutional investors ordered 15 times the amount of shares originally available to them and the retail tranche ended up being more than 130 times covered. The strong retail demand triggered an automatic clawback that will increase the retail portion of the offer to 50 per cent from 10 per cent originally. One source said the offer, which was arranged by Cazenove and Morgan Stanley, could have been priced even more expensively given the strong demand, but because of the weak tone in the market - the Hang Seng Index fell 580.73 points last week - the company decided to leave room for a bit more upside in the secondary market. However, one fund manager said the clawback had left too few shares for professional investors and said this could result in a similar trading debut to that seen by China Yurun Food Group last week. 'If fund managers don't get a significant enough allocation in these smaller IPOs, they are more likely to cut their position and take profit in the first one or two days rather than chase the price higher,' said Yang Liu, a managing director at Atlantis Investment Management. Yurun Food, a mainland producer of frozen and chilled pork, gained 2.02 per cent on its first day of trading last Monday, despite having attracted enough orders to cover the retail portion of the book 156 times. It closed at $3.875 yesterday, 4.72 per cent above its $3.70 issue price. China Paradise's final price corresponds to a 2005 price-earnings multiple of 16.3 times, which is above that of its larger mainland competitor, Gome Electrical Holdings. The latter is quoted at 15.4 times this year's estimated earnings after its share price fell 0.51 per cent yesterday. Morgan Stanley's private equity arm will hold about 19.6 per cent of the company at the time of listing.