Unit of Apple’s biggest supplier Foxconn plans to raise HK$3 billion in Hong Kong IPO

Taiwanese electronics company likely to help support parent firm’s move to expand manufacturing operations across North America

PUBLISHED : Thursday, 29 June, 2017, 8:01am
UPDATED : Saturday, 01 July, 2017, 2:39pm

FIT Hon Teng, a subsidiary of the world’s largest contract electronics manufacturer and maker of connectors for Apple’s iPhones, is looking to raise as much as HK$3 billion (US$391 million) from its initial public offering in Hong Kong, as it plans to make strategic investments in the United States and into new industries.

The company would be the second subsidiary of Taiwanese tycoon Terry Gou Tai-ming’s Hon Hai Precision Industry, also known by its trade name Foxconn, to go for a public listing on the city’s main board since contract handset manufacturer FIH Mobile in 2005.

The first day of FIT's international placing of about 891 million shares was oversubscribed on Thursday, with major funds and insurance companies among the investors, according to sources.

The price range for the firm's total public offering of 990 million shares was set on Wednesday at HK$2.38 to HK$3.08 per share.

The estimated gross proceeds from the IPO, based on the mid-point price offer of HK$2.73 per share and the full exercise of the so-called over-allotment option, could reach HK$2.9 billion.

Assuming the high end of FIT's share price offering and full over-allotment option are achieved, the gross proceeds are estimated to total HK$3.3 billion.

At a press conference on Wednesday, FIT’s senior management expressed confidence that the company’s credentials as a strong technology supplier to a US$57-billion global market would resonate well with investors in Hong Kong and around the world.

“We pride ourselves on being a global company,” said FIT chairman and chief executive Sidney Lu Sung-ching. “Our manufacturing footprint, besides those in China, has expanded into Southeast Asia and South America. So expanding into North America is part of our plan.”

That strategy would help support parent Hon Hai’s own development initiatives in the same geographic market.

Gou, the founder and chairman of Hon Hai, told a press conference in Taipei last week that the Foxconn group of companies may invest more than US$10 billion to establish manufacturing facilities in at least three states in the US.

Gou pointed out that Hon Hai has been in touch with the White House and expected negotiations to conclude by the end of next month or early August.

Hon Hai will build US assembly for display panels to get closer to American customers

Hon Hai is estimated to have up to 50 per cent total revenue exposure to the iPhone this year, according to Citi Research.

FIT, which recorded US$2.9 billion in revenue last year, is currently the fourth-largest supplier to the global connector market, according to Frost & Sullivan.

Its products range from fibre-optic transceivers, high-speed cable assemblies and connectors to antenna components, embedded optical modules and wireless charging components.

Following its acquisition of US firm Avago’s optical modules business in 2015, FIT recently paid US$2.5 million to take over Taiwanese XingFox Energy Technology in line with its push into the automotive and industrial industries, according to FIT executive director Christopher Lu Pochin.

FIT’s shares are scheduled to start trading in Hong Kong on July 13.