Ligent shares close up 4.6% in Hong Kong debut after $727 million IPO

Ligent Technologies shares closed 4.6% higher at HK$34.48 in their Hong Kong debut on 22 September, after a HK$5.67 billion IPO, Reuters reported. The offer price was HK$32.96 a share.

Ligent retreats from its morning high

The shares reached HK$39.3 in morning trading, a gain of as much as 19.2%, before giving up most of that rise by the close. The closing price gave buyers at the offer price a paper gain of HK$152 per board lot of 100 shares.

Trading volume reached 68.35 million shares worth HK$2.46 billion. Ligent ranked 12th by turnover on the Hong Kong exchange on 22 September. The Hang Seng Index gained 0.2% that day, while the Hang Seng Tech Index rose 0.3%.

Ligent sold 172.01 million shares in its base offering. Its listing prospectus put its value at about HK$32.4 billion at the offer price, Reuters reported. Bloomberg put its market value after the debut at about $4.3 billion in a report published by China Daily.

Demand differed between the two parts of the sale. The public offering was subscribed 35.16 times and the international offering 4.67 times, Reuters reported from a filing dated 21 September.

Cornerstone buyers take 47% of Ligent offering

Cornerstone investors signed up for about 47% of the base offering. Those investors receive a guaranteed allocation in exchange for holding the shares for at least six months. They include Primavera Investment Fund, GigaDevice Semiconductor and a unit of Amlogic Shanghai, Bloomberg reported.

Ligent makes optical transceivers, chips and network terminals. Its transceivers turn electrical data into light signals for transmission through fibre-optic cables. The equipment is used in data centres that need connections between servers and switches as computing capacity grows.

The company plans to spend about 52.9% of its net IPO proceeds on research and development, chiefly for faster optical products and chips. A further 25.1% is earmarked for expanded production capacity. Those plans put product development and manufacturing at the centre of its use of the money raised.

Ligent’s revenue for the six months ended 30 June was 5.39 billion yuan, up 27.9% from the same period a year earlier. Net profit increased 29.7% to 661 million yuan (US$98.7 million). Hisense Group Holding will retain about 40.1% control after the offering if no overallotment option is exercised.

Ke Yan, head of research at Shenton Research, said Ligent’s integrated optical-module manufacturing was a selling point, although its shipments remained concentrated in lower-end products. He identified a slowdown in the growth of computing demand as a risk to valuations across the AI supply chain.

Hong Kong IPO proceeds near $47 billion

Hong Kong IPO proceeds have reached nearly $47 billion this year, according to data compiled by Bloomberg. The city is on track for its strongest fundraising since at least 2021 when follow-on offerings are included.

Ligent’s local rival Zhongji Innolight raised $7.8 billion in July. Bloomberg described that transaction as Hong Kong’s biggest listing in seven years. The deals differ substantially in size, but both brought suppliers to the AI infrastructure market onto the Hong Kong exchange.

Citigroup and Citic Securities were joint sponsors of Ligent’s offering. Other cornerstone investors included Greater Bay Area Homeland Investment and CFTC Paragon SP, alongside the chipmakers and funds participating in the base offering.