Mainland sportswear brand Flyke International Holdings and car dealer Zhongsheng Group Holdings have opened their retail books to tap Hong Kong's equity market for more than HK$4 billion combined.
The retail market for initial public offerings has been quiet and investor appetite for new shares has declined since the beginning of this year.
As a result of the poor market conditions, Dalian-based Zhongsheng, which sells brands such as Lexus, Audi, Toyota, Nissan, Honda and General Motors, has halved the size of its initial public offering to HK$3.67 billion.
Huang Yi, its chairman and executive director, declined to comment on the reduced size of the offering, saying that the amount of capital raised had never been finalised and the current target was enough for the company's growth for the next two years.
Zhongsheng said in its prospectus it planned to use 70 per cent of the net proceeds to expand its distribution network in the coastal region by adding a total of 116 dealerships that are rated as 4S, meaning a franchise covering car sales, spare parts, after-sales service and after-sales customer surveys. Mainland customers prefer to buy from 4S dealerships because of their better after-sales service.
Huang also said Toyota's recalls were aimed at its cars in the United States and had had little impact on China. As of last September, Toyota constituted about 10 per cent of Zhongsheng's total sales.
However, Huang declined to give an updated figure for the proportion of Toyota cars sold by the company since the Japanese carmaker announced in September a recall in the United States.
