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China's Trip.com set to raise $1.09bn in Hong Kong share sale

Demand set to encourage other companies eyeing 'homecoming' listing

Trip.com is one of the Chinese companies aiming for a "homecoming listing" in Asia. (Photo by Ken Kobayashi)

HONG KONG -- Trip.com Group, a Nasdaq-listed Chinese online travel company, is set to raise 8.47 billion Hong Kong dollars ($1.09 billion) from a share offering in the city, according to two people familiar with the transaction.

The company, which offered 31.6 million shares, or a 5% stake, is likely to price its second listing at HK$268 a share, which equates to a 2.1% discount to the stock's closing price on Monday on the Nasdaq exchange in the U.S.

There was enough demand to cover the proposed issue multiple times, the people said. Previously Trip.com had suggested a maximum indicative price of HK$333 for retail investors.

The pricing was hurt by declines in the Nasdaq over the past four sessions that eroded 12.4% of the company's value. The shares were hit by fears that the resurgence in the coronavirus would continue to cripple its international offering.

Overall the company has gained 4.4% so far this year, giving it a market valuation of $21.2 billion.

The appetite for the offering should reassure a long queue of Chinese companies looking at so-called homecoming listings in Asia amid escalating tensions between Washington and Beijing.

Recent offerings, including from online search giant Baidu, flopped on their debuts, saddling some investors with losses and raising concerns that demand for new shares would wane.

Other U.S.-listed Chinese companies working on Hong Kong listings include Tencent Music Entertainment Group; Weibo, a Twitter-like service; and Vipshop Holdings, an e-commerce company.

Secondary listings have picked up momentum after the blacklisting of Chinese companies by U.S. authorities, including the Treasury, Defense and Commerce departments and the Federal Communications Commission.

Under a law passed last year, Chinese companies also risk expulsion from American exchanges within three years if U.S. regulators are not permitted to review their audit records. Beijing forbids such reviews on national security grounds.

Thirteen U.S.-listed Chinese companies have raised a combined $36 billion in Hong Kong through secondary listings since November 2019, according to Refinitiv, a financial data company.

Trip.com is scheduled to make its market debut on April 19 and plans to use the funds to expand its business and invest in technology.

The company posted a $2 million loss from operations in the final quarter of 2020, compared to an $88 million profit in the same period in 2019. Because of the COVID-19 pandemic, revenue fell 40% to $761 million for the quarter. Effective containment of the coronavirus in mainland China is reported to have led to a strong recovery in its domestic business.

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