Trip.com set to raise US$1.1 billion in Hong Kong secondary listing at HK$268 per share

The Shanghai-based travel booking site prices Hong Kong stock sale at 2 per cent discount to Nasdaq close on Monday
Baidu-backed Trip.com bets on recovery of the global travel industry in 2022

IPO

Georgina Lee

Published: 8:13pm, 13 Apr 2021

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Trip.com has priced its Hong Kong initial public offering at HK$268, a 2 per cent discount to its New York closing price overnight, which will see it raise about US$1.1 billion, below its initial target.

The Shanghai-based travel company is selling 31.6 million shares ahead of its secondary listing on the Hong Kong bourse. It had originally marketed the deal to investors at a maximum price of HK$333 per share. Trading on the main board is scheduled for next Monday.

The decline in its American depositary receipts (ADRs) in New York, however, has made that top-end price target a tougher sale. Companies seeking a secondary listing in Hong Kong often take reference from their last US closing price when they set the offer price here. Trip.com’s Nasdaq-listed stock has been trending lower, closing at US$35.2 Monday in its four straight day of decline. But over the past 12 months it has risen 46 per cent. Each ADR is equivalent to one ordinary share

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There is an overallotment option to sell up to 4.7 million shares to meet strong investor demand. JPMorgan, CICC and Goldman Sachs are the joint sponsors, global coordinators and lead managers of the deal.

Baidu-backed Trip.com joins several other US-listed Chinese tech firms in pricing their deals at below their targets this year.

Internet search engine and artificial intelligence giant Baidu, the single largest shareholder with an 11.5 per cent stake in trip.com, priced its Hong Kong secondary listing last month at 15 per cent below its original maximum price target. Chinese video-streaming and gaming platform, Bilibili, had to set the final offer price at an 18 per cent discount to its original target.

Other substantial investors with at least 5 per cent stakes include US asset manager T. Rowe Price and investment bank Morgan Stanley, according to the prospectus.

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Trip.com joins the steady exodus of US-listed Chinese tech companies seeking secondary listings in Hong Kong since last year, as a flood of capital from optimistic investors boosted valuations, amid an increasingly hostile US capital market driven by brinkmanship policies in the waning days of the Trump administration.

Total IPO proceeds raised in Hong Kong reached a historic high during the first quarter, totalling HK$132.8 billion across 32 deals, ranking the city’s bourse the world’s second-largest for IPOs globally after Nasdaq in terms of funds raised.

The 17-year-old firm, which operates booking sites such as Ctrip.com, Skyscanner and Qunar, is betting that it will be one of the beneficiaries of a rebound in global travel as the Covid-19 pandemic subsides.

The global travel market contracted last year by more than 50 per cent to US$2.6 trillion, from US$5.8 trillion in 2019, research by Analysys cited by Trip.com’s prospectus shows. But the industry is expected to rebound to pre-pandemic levels in 2022, driven by the roll-out of Covid-19 vaccines, and rising consumer spending power, especially from emerging markets such as Asia, according to Analysys.

Trip.com plans to invest the proceeds from its fundraising in its technology and enhancing its service offering.

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