Li Ka-shing-backed Razer rallies 18pc in Hong Kong trading debut after US$528m IPO
Razer, the US and Singapore-based gaming hardware maker run by Tan Min-Liang, wants to tap the world’s largest games market – China
Shares in Razer, the gaming hardware maker backed by Intel and Hong Kong’s wealthiest man Li Ka-shing, rose 18 per cent in debut trading in Hong Kong on Monday, after receiving an oversubscription of 290 times for its public offering, one of this year’s most popular IPOs.
Razer closed at HK$4.58, up 18 per cent from its IPO price of HK$3.88, paring a gain of as much as 41 per cent in the morning session.
The debut saw 894 million shares changing hands on Monday, worth a total of HK$4.4 billion, the second most heavily traded stocks in the market after Tencent.
The market value reached HK$41 billion by close, according to statistics from the Hong Kong stock exchange.
Razer, based in Singapore and San Francisco, raised HK$4.12 billion (US$528 million) in its global offering, reflecting the fourth-largest tech listing this year, after ZhongAn Online Property & Casualty Insurance, China Literature, and Yixin Group.
The company, run by Singapore entrepreneur Tan Min-Liang, its co-founder, CEO and executive director, will receive net proceeds from the IPO of HK$3.9 billion.
“We feel excited about it [listing in Hong Kong],” Tan said on Monday, adding that Razer is the first US-based tech firm to go public in the city.
“The offering has received a good response from both institutional and retail investors.”
Previously, Tan said the company chose Hong Kong as a listing destination partly as China is a vital growth market.
He said on Monday that Razer’s products had recorded strong sales results on China’s e-commerce sites on November 11, during the Singles’ Day online shopping bonanza.
The growth opportunity is “enormous” in China, whereby the games market is expected to grow from US$24.6 billion to US$34.7 billion in 2021, according to the company’s investor presentation document.
By listing in Hong Kong, Razer’s overall business would benefit from the proximity to China, the large customer base and investment community in that market, the document said.
There was also another benefit of the Hong Kong flotation, the support from its investor Li Ka-shing, Tan said on Monday.
About 220,000 retail investors subscribed for Razer’s new shares, with the locked-in investor capital reaching HK$124 billion, making the offering one of the most sought-after this year.
Due to the oversubscription, underwriters increased the public offering tranche from 10 per cent to 50 per cent, or 531.8 million shares.
Five cornerstone investors put in a combined US$153 million, including the Singapore government’s investment fund GIC Private, and Shenzhen real estate developer Kingkey Enterprise Holdings, each with a US$20 million investment.
Chen Huaidan, also known as Celine Tang, the group managing director of Singapore real estate developer Singhaiyi Group, is also a keystone investor with a US$50 million stake. Robert Budi Hartono and Michael Bambang Hartono, the two brothers at the helm of Indonesia’s Djarum Group, which makes one of every five cigarettes consumed in the country, invested US$33 million. Macau gambling magnate Loi Keong Kuong, who owns the Rio Casino in the enclave, is also an investor, having contributed US$30 million.
Razer plans to use a quarter of the proceeds raised to develop new verticals in the gaming and digital entertainment industry, such as mobile devices and audiovisual technology. Another 25 per cent will be used to finance other acquisitions that will continue the expansion of the company’s ecosystem.
The rest of proceeds will be used in research and development, marketing and sales, as well as for general working capital purposes.
Razer’s 2016 revenue grew 23 per cent to US$392 million. In the first half of 2017, revenue increased 30 per cent to US$198 million.
Nonetheless, the company suffered losses of US$20 million and US$60 million for 2015 and 2016 each. In the first half of this year, it reported a loss of US$53 million.